Price-to-Earning Growth Ratio and Value vs. Growth Based Strategies: Some European Evidences
16 Pages Posted: 4 Feb 2004
While recent studies have concentrated on why value outperforms growth, this paper verifies whether over performance level has changed over the recent period within the euro-zone, and whether these strategies are sensitive to earnings growth level, country or industry factors. Results show that a value strategy with a high earnings growth rate over performance the growth strategies for the euro zone. The strategy of selling short shares with a price to earning growth (PEG) ratio higher than one and buying shares with a PEG ratio less than one out performs other strategies.
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