PEG Ratio (Price/Earnings-to-Growth Ratio)
The P/E ratio adjusted for a company's earnings growth rate.
What it means
The PEG ratio refines the P/E by factoring in how fast earnings are growing. It helps you compare a cheap but slow company to an expensive but fast one on a level playing field.
Formula
PEG = P/E Ratio ÷ Annual EPS Growth Rate (%)
Example
A stock with a P/E of 30 growing earnings at 30% a year has a PEG of 1.0.
What is a good PEG Ratio?
A PEG around 1.0 is often considered fairly valued. Below 1.0 may be undervalued relative to growth; above 2.0 can look expensive. It relies on growth estimates, so treat it as a guide, not gospel.
See it on real stocks
Every stock analysis page shows PEG Ratio alongside the other key metrics: