IN PLAIN ENGLISH
The P/E ratio but with a twist—it accounts for growth. A low P/E might be a trap if the company isn't growing. PEG fixes that.
FULL DEFINITION
The Price/Earnings-to-Growth ratio determines a stock's value while taking the company's earnings growth into account.
EXAMPLE
PEG under 1.0 is often considered 'cheap' or undervalued relative to its growth rate.
HOW IT'S CALCULATED
PEG Ratio = P/E ratio ÷ annual earnings growth rate. Supplied by the market data provider. Because it depends on a growth estimate, PEG varies between data sources more than P/E does.
Educational content only. It is not personal financial advice.