What a load of nonsense this ratio is: where does one obtain accurate growth forecasts? The ratio is obviously at its most meaningful in a high-growth environment (it was, in fact, popularised during the "dot-com" era.) Companies that forecast the highest growth rates are often the least trustworthy and they are promoted by this approach. Companies with conservative growth rates are played-down in the results of this test. These include the "best-of-breed" companies. Also this ratio should really only be applied to the organic compnent of the growth achieved (how do you isolate that?) In truth - this ratio needs to be used carefully on a smooth distribution of results to isolate discrepancies vs. an array of results of comparative PE ratios for a given industry. Our market is too SMALL for that.
No, its more than that - it needs access to data that is not readily available from the financial statements - it needs to be applied in a more sophisticted manner by a better-informed analyst - it is not suited to a small market like ours where comparisons are not readily available (comparisons with norms from other economies would prove misleading.) It is subject to gross error since it is based on forecasts.
Which is precisely why we rely on ratios and other technical tools to lend an element of certainty (ie as "measuring rules") They act as stastical filters. When the most critical figure upon which that ratio is based - is a "forecast" - well... enough said!