The Price/Earnings-to-Growth (PEG) ratio refines the P/E ratio by dividing it by the company's expected earnings growth rate. A PEG around 1.0 is often considered fair value; below 1.0 may indicate an undervalued growth stock. The PEG helps investors avoid overpaying for fast-growing companies that look expensive on P/E alone.
Related Terms
The Price-to-Earnings (P/E) ratio measures how much investors are paying for each dollar of a compan...
The Price-to-Sales (P/S) ratio compares a company's stock price to its annual revenue per share. It ...
Earnings Per Share (EPS) is a company's net profit divided by its total number of outstanding shares...
Book value is a company's total assets minus its total liabilities — essentially what would be left ...
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