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The price/earnings to growth ratio (PEG ratio) is a stock's price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period.
The price/earnings to growth ratio (PEG ratio) of a stock is its price/earnings ratio (P/E ratio) divided by its percentage growth rate. Stock analysts and investors...
The formula for the PEG ratio is derived by dividing the stock’s price-to-earnings (P/E) ratio by the growth rate of its earnings for a specified time period. PEG ratio stands for Price/Earnings to Growth ratio, which lets analysts assess how likely a firm is to grow in the coming times.
PEG Ratio Formula. The PEG formula consists of calculating the P/E ratio and then dividing it by the long-term expected EPS growth rate for the next couple of years.
The PEG ratio, also known as the price/earnings to growth ratio, is a very widely used investment metric to analyze a company's attractiveness for investment. This article will help you to understand the following topics: What is PEG ratio?; How to calculate PEG ratio?; and; How do we apply the PEG ratio formula and PEG ratio theory in real life?
What is the PEG Ratio formula? Understanding the PEG ratio begins with its formula, which is elegantly simple yet profoundly informative. Here, the P/E Ratio represents how much investors...
What is the PEG Ratio Formula? The PEG ratio formula for a company is as follows: PEG = Share Price / Earnings per share / Earnings per Share growth rate. Using the example shown in the table at the top of this guide, there are three companies we can compare – Fast Co, Moderate Co, and Slow Co.
Put simply, you take the price/earnings ratio and divide it by the earnings growth. Here is the formula: PEG ratio = (price / earnings) / growth. How to use the PEG ratio formula to value a stock. To explain how this works, let's examine Microsoft's PEG ratio.