FIGURE 8.9 PEG Ratios versus Expected Growth:
Semiconductor Firms
Toallowforthenonlinearrelationship,weregressthePEG
ratio against the natural log of the expected growth rate:
8
ConsiderIntel.WithaPEGratioof1.22,Intelistradingata
lower PEG ratio than the average of 1.64 for the sector,
suggesting, atleaston a preliminarybasis,an undervalued
stock.Plugging intheexpectedgrowthrateof17.50%,the
predicted PEG ratio based upon this regression is: