How to check if a stock is overvalued or undervalued? | What is PE Ratio? What is PEG Ratio?

Disclaimer: This video is only for education purpose. Consult your financial Advisor before investing your money.
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In this video, I have explained how to check the valuation of a company i.e. how to check if the company is overvalued or undervalued. I have explained 2 ways i.e. PE ratio and PEG Ratio.

PE ratio is calculated as “Price per share” divided by “Earnings per share”.
PEG ratio is calculated as PE ratio divided by earnings growth.

I have explained the PE ratio and PEG ratio with real-world examples of ITC, HDFC Bank, and Jubilant FoodWorks to undervalued which company is undervalued, fairly valued or overvalued.

First, check the PE ratio of this company in the last 3-5 years and identify the median PE. Then compare the current PE with the median PE. If the current PE is more than median PE, you can say that the company is overvalued. If the current PE is less than the median PE, you can say that the company is undervalued.
Secondly, you need to look at the PE ratio of the industry. For example, if Infosys is trading at a PE of 25 then what is the PE ratio of entire IT industry. Ideally, there should not be too much of a difference if the companies are at par. For example, if you want to compare Infosys PE with Industry, you can look at the PE ratio of TCS, Wipro and HCL that are at par with Infosys. This would give you an idea of PE movement of the stock as compared to the other companies in the same sector.

[thirumenithestorm]

Not just stoping with theory, Examples and calculations are ultimate .. make him stand tall of others

[startcreate]

Mujhe English nahi aati lekin aap jo kahte hain vo samajh jata hun. Your English is so easy to understand. And information is so valuable. Thanks.

[balajirao]

Excellent Sahil. I am a CA and not even my teachers had taught me these concepts in such a simple language.

[satheesh]

Very good clarity in explaination. I went through so many videos to understand valuation and stock picking. Finally this video gave me the clairty ..

[richardsalley]

I can appreciate this video very much.
P/E and PEG indicators are a great snapshot for quick evaluation, before you decide whether or not a company is worthy enough to look into further.

[sujit]

Seeing this at 1am with sound OFF and captions ON....concept perfectly cleared....❤❤💯💯

[SrinivasRao-yuhl]

Dear Respected Sir,
Doesn't have the option to like more than one time else will kill the like button.
Thank you,
Srinivas

[kranthikumar]

I am telugu state. Ur fundamental explanation is extraordinary. Actually I didn't understand English speeks. But ur using simple words of English impressed by telugu traders also.

[rajivbakshi]

Shahil, Wish you good health with your knowledge on this Happy Holi. You have total command on the subject .God Bless you . R.R.Bakshi

[NaveenKumar-fgfn]

Such a clear explanation with simple terms which can be understood by a layman. You are doing a great work. Excellent Sahil 👍🏻

[archanas]

You truly explain it the way a layman can understand. I thought I would never understand all this, but you made it so easy with your examples. Thank you

[jkj]

FIRST I USED TO SKIP YOUR VIDEOS, BUT YOUR VIDEOS ARE FOUND VERY VALUABLE, AND YOUR INTENTION TO GIVE CLARITY IS AMAZING AND SELFLESS .

[puttajunjaiah]

Actually none of what to say matters in India 😂😂 simple way is look who is in power BJP or Congress. If it's BJP, invest in Ambani, Adani owned businesses blindly. If it's Congress invest in NDTV, Bajaj etc. The party in power will help propel the stock values through all possible ways, legal or illegal. Period.

[johnsonmathias]

Perfectly explained the stock PE concept in Layman's language . well done

[kspshivan]

Thank you Sahil. Got a clear knowledge about the PE, PEG ratio, future growth earnings. How to calculate all this things while buying the shares. Very clean and neat info. Great work… Hearty wishes for your extraordinary work…

[OmPrakash-nzpr]

Rain of valueable information, grab it as much as you can.

[sundieepsiingh]

Bole toh jhakaas. You have made the complex terminology look so easy. Seedha chakka maar daala. Great stuff young man. Keep up the good work 👍

[GurpreetSingh-occd]

You are the genius sir please make more videos on the stock market it is a very easy to understand everyone beginner in the stock market it is a much better than paid subscription channel courses

[rsntshkmr]

Well explained. Difficulty to find company using PEG.

[pushparallapalli]

Very useful & clear presentation. Appreciate your skill & hard work