CONTINUING IN THE RIGHT DIRECTION
EOH has been one of the darlings of the stock market with its one year return around 70%, 385% over three years and just over 1 400% in five years. The question most often asked is if it is expensive.
Well, on a historic P/ E of 25 times, and a trading update offeri ng HEPS up 30%-35%, t he answer is no. A high P/ E is f ine as long as earnings growth remain higher, effectively resulting in a PEG ratio below one. PEG is P/E divided by earnings growth, and anything below one suggests value or an undervalued stock.