P/E of Growth Stock (1+G+D) of Growth Stock ln ------------------------- = T Ln ---------- P/E of Non Growth Stock (1+G+D) of Non Growth Stock It also says… If the implied growth duration is greater than you believe isreasonable, you recommend aganist buying and if the implied growth duration is less that you believe, then recommend buying… I am not able to understand or appreciate how can we compare aganist what we believe and take a decision. Can someone help me to understand what this is…
hi, i am reading equity as the moment and had to read these two sentences more than once… from my understanding if you believe the company will grow by a certain amount and the implied growth duration is less than what you are anticipating then it is an undervalued stock and there is more room for an increase in price (better prospects) and so you recommend a buy. However, if the implied growth duration is higher than what you believe the price would already be reflecting this growth and it would be an overvalued stock. Thus will not buy the stock. This is is my understanding and hope that it makes sense… Could someone confirm my understanding please? Thank you
hi, Could you please confirm? Thank you