Neither P/E, nor PEG are useful metrics when dealing with a young growth company. Consider this: There was a time when Yahoo! had many potential customers and

Neither P/E, nor PEG are useful metrics when dealing with a young growth company. Consider this: There was a time when Yahoo! had many potential customers and a substantial business and technological lead over the competition, but no positive earnings. The same was true more recently of Genzyme, currently a multi-billion dollar biotech company. Would it be reasonable to assign zero or negative values to such companies? Of course not. And what happens when a high-tech growth company climbs up from a small negative earnings to a small positive earnings? Suddenly instead of having an undefined P/E, they have a very high P/E. This is reasonable. A solar power company with 500m in sales and 1m in earnings that had 200m in sales and hugely negative earnings in the previous year could very well be worth over a billion. If the market gave it such a valuation, gawking at its P/E of 1000, and then applying the same P/E to an established company like Kraft would just be a waste of breath.