Key Takeaway
The PEG ratio (P/E divided by earnings growth rate) adjusts valuation for growth. A PEG below 1.0 suggests the stock is undervalued relative to its growth rate , a metric made famous by Peter Lynch.
PEG Ratio Calculator
Calculate Price/Earnings-to-Growth ratio for GARP valuation.
PEG Ratio
1.67
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Frequently Asked Questions
What is the PEG Ratio?
The Price/Earnings-to-Growth (PEG) ratio is a valuation metric that determines the relative trade-off between the price of a stock, the earnings generated per share, and the company's expected growth.
What does a PEG ratio below 1.0 indicate?
A PEG ratio below 1.0 generally suggests that a stock is undervalued given its expected earnings growth, making it an attractive prospect for GARP (Growth at a Reasonable Price) investors.
Why use PEG instead of just P/E?
P/E ratios can make fast-growing tech companies look extremely expensive. The PEG ratio factors in that growth rate, providing a more balanced view of valuation.
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