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system
is peter lynch talking about the dividend adjusted peg ratio in this quote?
user
essentially, yes, peter lynch is talking about the peg ratio. the price/earnings to growth (peg) ratio is where you take the p/e ratio and then divide that by the growth rate (which should include any dividends).  a lower number indicates that the stock is undervalued, and could be a good buy. lynch's metric is the inverse of that: growth rate divided by the p/e ratio.  it is the same idea, but in this case, a higher number indicates a good value for buying. in either case, the idea behind this ratio is that a fairly priced stock will have the p/e ratio equal the growth rate.  when your growth rate is larger than your p/e ratio, you are theoretically looking at an undervalued stock.
assistant