PEG Ratio

valuation

The price/earnings-to-growth ratio divides the P/E ratio by the expected earnings growth rate. A PEG of 1.0 suggests the stock is fairly valued relative to its growth. Below 1.0 may indicate undervaluation, above 1.0 may indicate overvaluation. PEG attempts to account for growth, which the basic P/E ratio ignores.

Related Terms

Earnings Per Share (EPS) Forward P/E Ratio Price-to-Earnings Ratio (P/E)

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