Peter Lynch Fair Value
View All TermsPeter Lynch Fair Value is calculated as follows:
Peter Lynch Fair Value = {PEG} * {5-Year EBITDA Growth Rate} * {Earnings per Share}
If 5-Year Earnings Growth Rate is greater than 20% a year, we use 20.
Please note that we use the 5-year average growth rate of EBITDA per share as the growth rate. EBITDA growth is subject to less manipulations than net earnings per share. In the calculation, PEG=1 because Peter Lynch thinks that the fair P/E ratio of the growth stock is equal to its earnings growth rate.
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