Price to Earnings Growth

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Benzinga  45 min ago  Comment 
Below are the top telecom services-foreign stocks on the NYSE in terms of PEG ratio. Orange (NYSE: ORAN) has a PEG ratio of 0.72. Orange's trailing-twelve-month revenue is $49.77 billion. China Telecom Corp. Ltd. (NYSE: CHA) has a PEG ratio of...
Benzinga  Nov 19  Comment 
Below are the top small-cap textile-apparel clothing stocks on the NYSE and the NASDAQ in terms of PEG ratio. Zuoan Fashion (NYSE: ZA) has a PEG ratio of 0.35. Zuoan Fashion's trailing-twelve-month revenue is $187.00 million. G-III Apparel...
Forbes  Nov 18  Comment 
Suncor Energy's Board of Directors has approved a quarterly dividend of $0.28 per share on its common shares, payable December 24, 2014 to shareholders of record at the close of business on December 3, 2014.
Benzinga  Nov 18  Comment 
Below are the top small-cap trucking stocks on the NYSE and the NASDAQ in terms of PEG ratio. SJW (NYSE: SJW) has a PEG ratio of 0.80. SJW's trailing-twelve-month revenue is $777.60 million. P.A.M. Transportation Services (NASDAQ: PTSI) has a...
Benzinga  Nov 17  Comment 
Below are the top small-cap water utilities stocks on the NYSE and the NASDAQ in terms of PEG ratio. SJW (NYSE: SJW) has a PEG ratio of 0.86. SJW's trailing-twelve-month revenue is $317.60 million. Connecticut Water Service (NASDAQ: CTWS) has...
The Hindu Business Line  Nov 12  Comment 
Coffee production for the current season that began in October is likely to remain at last year’s level of around three lakh tonnes, on lower production of Arabicas, a growers’ body said.
Benzinga  Nov 11  Comment 
Below are the top stocks in the consumer goods sector in terms of PEG ratio. Meritor (NYSE: MTOR) has a PEG ratio of 0.07. Meritor's trailing-twelve-month EPS is $2.81. Orient Paper (NYSE: ONP) has a PEG ratio of 0.07. Orient Paper's...
Resource Investor  Nov 10  Comment 
Switzerland’s referendum on boosting gold reserves is already increasing pressure on the franc’s cap against the euro, even as polls show voters remain undecided.




 

This article is about the financial metric Price/Earnings To Growth. For the article on the company with ticker PEG, see Public Service Enterprise Group (PEG).

The PEG ratio equals the P/E Ratio divided by projected annual earnings-per-share growth

The PEG ratio (alternately PE/G, P/E to G, Price/Earnings to Growth, or Price to Earnings to Growth) is a valuation metric comparing the Price to Earnings ratio of a company to its projected annual Earnings Per Share growth.

A PEG ratio below 1 would indicate a company is undervalued relative to its share price, while a PEG greater than 1 would indicate an overpriced stock, as a high P/E should generally correlate with a market expectation of greater forthcoming earnings.

However, as PEG relies on projected EPS growth, its usefulness is tied directly to the accuracy of such projections.

It must be noted that PEG is only a rule of thumb and has no underlying mathematical basis for gauging what a company's share price truly "should" be. The ratio has been criticized for penalizing value stocks, which have lower earnings growth.

Examples

  • Company XYZ is trading at $20/share with an EPS of $1.00 for a P/E of 20. Analysts predict a 50% annual earnings increase over the next five years. The PEG ratio of XYZ is therefore .40, indicating the stock is undervalued by the market assuming the earnings projection is accurate.
  • Company ABC is trading at $50/share with an EPS of $1.00 for a P/E of 50. Analysts predict a 50% annual earnings increase over the next five years. The PEG ratio of ABC is therefore 1.00, indicating the stock is valued properly by the market assuming the earnings projection is accurate.
  • Company LMN is trading at $10/share with an EPS of $1.00 for a P/E of 10. Analysts predict a 5% annual earnings increase over the next five years. The PEG ratio of LMN is therefore 2.00, indicating the stock is overvalued by the market assuming the earnings projection is accurate.
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