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The 'PEG ratio' (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share , and the company's expected growth.
While its forward P/E is more than 40.5 times 2025 analyst estimates, the company's price/earnings-to-growth (PEG) ratio is only 0.65. A PEG ratio under 1 is generally view as undervalued, and ...
A 1.2 PEG ratio is a bargain for most stocks, let alone arguably the world's dominant AI company. It also doesn't seem likely that AI is a fad; there's too much money piling into the sector for ...
Stock B is trading at a forward P/E of 30 and expected to grow at 25%. The PEG ratio for Stock A is 75% (15/20) and for Stock B is 120% (30/25). According to the PEG ratio, Stock A is a better purchase because it has a lower PEG ratio, or in other words, its future earnings growth can be purchased for a lower relative price than that of Stock B.
The PEG ratio compares a stock's valuation to the company's anticipated growth rate (a lower ratio means better value). I usually don't mind buying high-quality stocks at PEG ratios up to 2 to 2.5 ...
Metrics like the price-to-earnings (P/E) ratio or price/earnings-to-growth (PEG) ratio are a good place to start, as they can help measure the company's growth potential in comparison to its stock ...
A PEG ratio below 1 is typically considered undervalued, but growth stocks will quite often have PEG ratios well above 1. A chip wafer. Image source: Getty Images. 2. Taiwan Semiconductor ...
That's a PEG ratio of 1.4. I happily buy high-quality stocks at PEG ratios up to 2 or 2.5, so Meta's a bargain by this measure. The company's advertising business is a juggernaut with a long ...