How Peter Lynch Values a Stock! (Peter Lynch's Valuation Tutorial)

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Peter Lynch is an American investor, mutual fund manager, and philanthropist. As the manager of the Magellan Fund at Fidelity Investments between 1977 and 1990, Lynch averaged a 29.2% annual return, consistently more than double the S&P 500 stock market index and making it the best-performing mutual fund in the world. In this video, I take you step by step to show you his process of valuing stocks. Let me know if you have any questions below!

Formula to automatically pull in price to earnings:
=GOOGLEFINANCE(H7,"pe")

I am not a Financial advisor or licensed professional. Nothing I say or produce on YouTube, or anywhere else, should be considered as advice. All content is for educational purposes only. I am not responsible for any financial losses or gains. Invest and trade at your own risk. Some of the links in the description may be affiliate links.

[suyueqian]

Great, you make it easy to follow and easy to understand. Thanks.

[rrad]

Pretty easy formula to see the results. P/E-Dividend and compare that to expected growth. < Growth undervalued and >Growth overvalued. Never saw his formulation before. Thank you for giving me something else to consider.

[juansteverlynck]

Your channel is great, adding this method of valuation to your next valuation videos would be really cool!
All the best of luck and thank you for your awsome content!

[esteemedfustilarian]

Just an FYI for other investors, a lot of places will look at the formula in an inverse way—Price to earnings divided by growth+dividend yield. In such cases, a result of less than 1 may be undervalued and over 1 could be overvalued. You should always make sure you understand what the formula is *telling you* and do you own research.

[myuey.]

I came across the video and it's really useful!!
Thank you so much for your explanation❤

[Skilliard]

This does seem a bit dated. If you go by Peter Lynch's belief that corporate earnings grow 8% per year, the S&P500 would be valued at (8 + 2) / 20 = 0.5 = Very overvalued.

Peter Lynch has always encouraged people to buy stocks as well, so in a market where everything is (comparatively) overvalued, finding stocks above 2 or 3 would be exceedingly difficult.

[osmarismail]

Agree wth Peter. It depends on your mode of investing. Ie Long term. Earnings and dividence ratio will determine the growth of a company.

[naghulmx]

Understand one thing, if making money was easy every buddy around you should have become millionaires by now.

[rimonchoudhury]

Excellent channel - wanted to make a excel template using Peter Lynch Formula

[maximegosselin]

Great video again! thank you so much;
I was running some tests on disney stock but their dividend yiend is N/A on yahoo finance. As a consequence, the excel outputs 0, 0055 (which would be terribly overvalued) However, I assume that there is some kind of interpretation when such thing happens ?

[investerasmart]

". If you spend 13 minutes analyzing economic and market forecasts, you have wasted 10 minutes.”
-Peter Lynch.

[amitbeohar]

Excellent pratical explaination makes confident, thank

[pjc_deleon]

whats the principle/basis behind the formula? Can this be traced back to fundamental DCF?

[stevedarragh]

Glad you made this video. Hope lots of "investors" follow it. Lunatics!

[leverage]

When you looked at the dividend yield for AT&T, it says "forward" dividend and yield.

What does "forward" stand for? Does it mean it is the expectation for the future dividend yield?

And also the "future" earnings per share growth..

Why is it that every factor that must be taken into account is about the future? Isn't it dangerous to make projections about the future?

Isn't the past decade performance of the company a more reliable (but not perfect) indicator of how it may perform?

[vidya]

PEGY= 1
P/E = G + DY

Math Derivation leads to:

P = √[(50*growth ratio*eps)^2 + 100*eps*DPS] + 50*growth ratio*eps

[TomasWatchReviews]

VOW 4, 26. Toyota 2, 06. Honda 3, 01. There are plenty. But that is only one side of the coin. It shows investors expectations rather than valuation. I would say if close to 1 - hype. 2 - might be good deal. 3 something might be wrong. 4 probably trash with lots of debt.

[dpngpjh]

Can I ask where you found this calculation from Lynch? I read much about and written by him and I did not find this

[jongreenwood]

Expectations of future growth does a lot of heavy lifting in this model

[spinchange]

Also known as the PEGY ratio which was a twist on the PEG ratio. (Price Earnings Growth ratio or Price Earnings Growth + Yield ratio)