Price/Earnings-to-Growth (PEG) Ratio

PEG Ratio represents Price/Earnings to Growth, which is a means of determining the value of a stock considering a company's earnings growth. The PEG ratio is expressed as a percentage by separating the stock's price-to-earnings by its earnings per share growth.

Features

• The PEG ratio enhances the P/E ratio by adding in expected earnings growth into the calculation.
• The PEG ratio is considered to be an indicator of a stock's true value, and like the P/E ratio, a lower PEG might indicate that a stock is undervalued.
• The PEG for a given company might differ essentially starting with one reported source then onto the next, depending on which growth estimate is used in the calculation, for example, one-year or three-year projected growth.