It is the basis of our Valuation Rating. This is the estimated growth of future earnings (LT Growth) plus dividend in %, divided by the estimated future PE ratio (Long Term P/E).

Our G/PE Ratio measure is an index figure that compares firms on whether their stock is relatively "expensive" or "inexpensive" according to their potential earnings growth. We focus our attention on G/PE Ratio measures generally between 0.9 and 1.6, as this range of the index is most likely to include firms that will outperform their peers. A G/PE Ratio measure below 0.9 indicates that investors must pay a premium for the estimated growth potential; thus, the stock is relatively risky.