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What is Peter Lynch Below-Earnings-Line Screen?


In his excellent book One Up on Wall Street, Peter Lynch, the best mutual fund manager ever, revealed a powerful charting tool that helped him to achieve a gain of 29.2% in his portfolios for 13 years. In this chart, Peter Lynch drew the stock price and the earnings per share together and aligned the value of $1 in earnings per share to $15 in stock price. He wrote in pages 164-165 of the book:

"A quick way to tell if a stock is overpriced is to compare the price line to the earnings line. If you bought familiar growth companies when the stock price fell well below the earnings line, and sold them when the stock price rose dramatically above it, the chances are you'd do pretty well."

This page displays the stocks that are currently traded below their Peter Lynch Earnings Line. According to Peter Lynch, you will probably "do pretty well" with these stocks.

With similar philosophy, we have also created screens to find stocks that are traded below their historical median book value multiples, median sales multiples and median EBITDA multiples. If you are not a Premium Member, we invite you for a

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Current Selected: USA
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SymbolCompanyPredictability Market Cap ($mil)Earnings Yield (%)Return on Capital (%)10-Y EBITDA Growth Rate (%) 5-Y EBITDA Growth Rate (%)P/EYield (%)Rank
Premium Member OnlyPremium Member Only
  • Currently 4/5
Business Predictability Rank: 4-Star (On Watch)
Back Testing Results:
Average gain of all 4-Star stocks: 9.8% per year.
% of Stocks that are in still loss if held for 10yrs: 8%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
539.96415.4036.0124.40 77.4010.200.001
Premium Member OnlyPremium Member Only
  • Currently 1/5
Business Predictability Rank: 1-Star
Back Testing Results:
Average gain of all 1-Star stocks: 1.1% per year.
% of Stocks that are in still loss if held for 10yrs: 45%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
2648.76020.30139.9119.70 34.508.602.882
Premium Member OnlyPremium Member Only
  • Currently 1/5
Business Predictability Rank: 1-Star (On Watch)
Back Testing Results:
Average gain of all 1-Star stocks: 1.1% per year.
% of Stocks that are in still loss if held for 10yrs: 45%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
111.4995.70147.110.00 24.8011.707.253
Premium Member OnlyPremium Member Only
  • Currently 2/5
Business Predictability Rank: 2-Star
Back Testing Results:
Average gain of all 2-Star stocks: 6% per year.
% of Stocks that are in still loss if held for 10yrs: 16%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
978.80816.90151.5356.20 41.109.904.094
Premium Member OnlyPremium Member Only
  • Currently 1/5
Business Predictability Rank: 1-Star
Back Testing Results:
Average gain of all 1-Star stocks: 1.1% per year.
% of Stocks that are in still loss if held for 10yrs: 45%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
223.01710.1048.950.00 43.1012.603.225
Premium Member OnlyPremium Member Only
  • Currently 4/5
Business Predictability Rank: 4-Star (On Watch)
Back Testing Results:
Average gain of all 4-Star stocks: 9.8% per year.
% of Stocks that are in still loss if held for 10yrs: 8%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
591.88912.50879.5338.70 15.6010.401.466
Premium Member OnlyPremium Member Only
  • Currently 1/5
Business Predictability Rank: 1-Star (On Watch)
Back Testing Results:
Average gain of all 1-Star stocks: 1.1% per year.
% of Stocks that are in still loss if held for 10yrs: 45%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
227.54111.2020.06-4.10 1.5012.103.927
Premium Member OnlyPremium Member Only
  • Currently 3.5/5
Business Predictability Rank: 3.5-Star
Back Testing Results:
Average gain of all 3.5-Star stocks: 9.3% per year.
% of Stocks that are in still loss if held for 10yrs: 9%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
4679.06212.20230.6018.60 29.1011.301.778
Premium Member OnlyPremium Member Only
  • Currently 4/5
Business Predictability Rank: 4-Star
Back Testing Results:
Average gain of all 4-Star stocks: 9.8% per year.
% of Stocks that are in still loss if held for 10yrs: 8%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
5456.85810.9022.0419.90 17.4010.702.949

Add Notes, Comments or Ask Questions

User Comments

JEANRSMITH1@GMAIL.COM
ReplyJEANRSMITH1@GMAIL.COM - 2 days ago
don't waste my time with n on sense
Peixia
ReplyPeixia - 1 week ago
"In this chart, Peter Lynch drew the stock price and the earnings per share together and aligned the value of $1 in earnings per share to $15 in stock price."

I have the book and referred to p.164-165, where Lynch merely mentioned earnings line. But I can't find anywhere in his book that he aligned $1 in EPS to $15 in stock price. Could you please confirm the page(s) where he did this, as it's not in p.164-165.

Thanks.



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