What does a negative PEG ratio indicate? Is it bad or very bad?
As far as I know, if you're buying a stock with a PEG ratio less than 1, then it's a good valuation of that stock.
But I don't have any idea what a negative PEG indicates. Is it bad or very bad?
Here are many stocks that have a negative PEG ratio.
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a negative PEG (Price to Earnings Growth) ratio can mean one of two things: either the company's current earnings are negative, or its expected earnings growth rate is negative. Neither are desirable outcomes.
If a company's current earnings are negative, you should assess whether this is a short-term problem (e.g. brought about by one-off impairment or restructuring charges) or the sign of structural problems.
The same rules apply when it comes to assessing a company's expected earnings growth rate. However, it is fair to say that negative expected growth rates are usually a "red flag".
It also helps to compare a company's PEG ratio against that of its peers, to put a company's ratio in context.
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