Price/earnings to growth ratio, a stock price analysis tool
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 (EPS), and the company's expected growth.
In general, the P/E ratio is higher for a company with a higher growth rate. Thus, using just the P/E ratio would make high-growth companies appear overvalued relative to others. It is assumed that by dividing the P/E ratio by the earnings growth rate, the resulting ratio is better for comparing companies with different growth rates.[1]
The PEG ratio is considered to be a convenient approximation. It was originally developed by Mario Farina who wrote about it in his 1969 Book, A Beginner's Guide To Successful Investing In The Stock Market.[2] It was later popularized by Peter Lynch, who wrote in his 1989 book One Up on Wall Street that "The P/E ratio of any company that's fairly priced will equal its growth rate", i.e., a fairly valued company will have its PEG equal to 1. The formula can be supported theoretically by reference to the Sum of perpetuities method.
^Easton, Peter D. (January 2002). "Does the Peg Ratio Rank Stocks According to the Market's Expected Rate of Return on Equity Capital?". SSRN 301837.
^Farina, Mario V. (1969), A Beginner's Guide to Successful Investing in the Stock Market
The 'PEGratio' (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings...
expected to grow at 25%. The PEGratio for Stock A is 75% (15/20) and for Stock B is 120% (30/25). According to the PEGratio, Stock A is a better purchase...
up peg, Peg, or PEG in Wiktionary, the free dictionary. PEG or peg may refer to: Clothes peg, a fastener used to hang up clothes for drying Tent peg, a...
predetermined ratio to a different, more stable, or more internationally prevalent currency (or currencies) to which the currency is pegged. In doing so...
per Share Price/sales ratio Market Price per Share/Gross Sales PEGratio Price per Earnings/Annual EPS Growth Other Market Ratios EV/EBITDA Enterprise...
SPM can be used to help explain the PEGratio as it provides a derivation and theoretical framework for the PEG. SPM is derived from the compound interest...
Polyethylene glycol (PEG; /ˌpɒliˈɛθəlˌiːn ˈɡlaɪˌkɒl, -ˈɛθɪl-, -ˌkɔːl/) is a polyether compound derived from petroleum with many applications, from industrial...
company drive the fair value of the company, the PEGratio is more meaningful than the P/E ratio. The PEGratio incorporates the growth estimates for future...
Return on equity DuPont analysis PE ratio PEGratio Cyclically adjusted price-to-earnings ratio PVGO P/B ratio Price to cash based earnings Price to Sales...
reasonable price" (GARP). He used the ratioPEG (PE ratio divided by per share growth rate) as a metric. He regarded PEGratio of 1.0 or lower to be an indicator...
during the last recession. The company's PEGratio is low. A Price/Earnings/Growth rate below 1 means the PE ratio is less than the growth rate. An excellent...
price-to-book ratio (P/B) is a commonly used benchmark comparing market value to the accounting book value of the firm's assets. The price/sales ratio and EV/sales...
tuning peg in a pegbox is perhaps the most common system. A peg has a grip or knob on it to allow it to be turned. A tuning pin is a tuning peg with a...
valuation, i.e. when comparing between two investments (see similar re PEGratio). PVGO is calculated as follows: PVGO = share price − earnings per share...
columnar and intercalary cells. The ratio of these remaining cells is dictated by an individual's hormone status. Peg cells secrete nutrients for the egg...
tent pegs are also manufactured. Wooden tent pegs are now not common, with higher strength to weight ratio, and high durability, materials being used instead...
been achieved: Move one disk from peg A to peg B or vice versa, whichever move is legal. Move one disk from peg A to peg C or vice versa, whichever move...
covalent and non-covalent attachment or amalgamation of polyethylene glycol (PEG, in pharmacy called macrogol) polymer chains to molecules and macrostructures...
pound (1:1 pegged to sterling) Isle of Man pound (1:1 pegged to sterling) Jersey pound (1:1 pegged to sterling) Kiribati dollar (1:1 pegged to the Australian...
incommensurate ratio of [square root of (2)] by striking a circular arc (which could easily be done with a rope rotating around a peg). Most also argued...
to a wider aspect ratio, first to the 16:10 ratio. The 16:10 ratio allowed some compromise between showing older 4:3 aspect ratio broadcast TV shows...
is not normally traded outside Bermuda, and is pegged to the United States dollar at a one-to-one ratio. Both currencies circulate in Bermuda on an equal...
located on the instrument's headstock. Other names for guitar tuners include pegs, gears, machines, cranks, knobs, tensioners and tighteners. Non-geared tuning...
levels of unsaturated fats, there is higher viscosity in cold temperatures. PEG-10 sunflower glycerides, a pale yellow liquid with a "slightly fatty" odor...
The Convertibility plan was a plan by the Argentine Currency Board that pegged the Argentine peso to the U.S. dollar between 1991 and 2002 in an attempt...
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