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Article . 2025 . Peer-reviewed
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Preprint . 2025
License: CC BY
Data sources: Datacite
ZENODO
Preprint . 2025
License: CC BY
Data sources: Datacite
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Extending the P/E and PEG Ratios: The Role of the Potential Payback Period (PPP) in Modern Equity Valuation

Authors: Sam, Rainsy;

Extending the P/E and PEG Ratios: The Role of the Potential Payback Period (PPP) in Modern Equity Valuation

Abstract

Traditional valuation metrics like the Price-to-Earnings (P/E) ratio and the PEG ratio have long served as tools for assessing equity value. However, these widely used measures often overlook key financial variables such as earnings growth, discount rates, and risk. This article introduces the Potential Payback Period (PPP) as an evolution in valuation methodology — one that enhances, refines, and extends the utility of P/E and PEG ratios. By offering a time-based measure of how long it takes for a company's earnings to recover the investment, and deriving a Stock Internal Rate of Return (SIRR) from it, the PPP integrates growth and risk into a unified framework. A visual and conceptual breakthrough — the Hidden Value Zone (HVZ) — is introduced, revealing how PPP identifies undervalued high-growth stocks that traditional PEG ratios misclassify. The analysis shows how PPP provides a more dynamic, forward-looking, and theoretically grounded approach to equity valuation, making traditional ratios more relevant when used in conjunction with this enhanced model.

Related Organizations
Keywords

Stock valuation; Price-to-Earnings ratio (P/E); PEG ratio; Potential Payback Period (PPP); Stock Internal Rate of Return (SIRR); growth and risk adjustment; discounted earnings.

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
hybrid