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12/29/2012 8:14:16 AM
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PEG ratio

 

 

The growth rate is expressed as a percentage above 100%, and should use real growth only, to correct for inflation. E.g. if a company is growing at 30% a year, and has a P/E of 30, it would have a PEG of 1. A lower ratio is "better" (cheaper) and a higher ratio is "worse" (expensive).

The P/E ratio used in the calculation may be projected or trailing, and the annual growth rate may be the expected growth rate for the next year or the next five years.

Price/Earnings to Growth (PEG Ratio)

 





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