Price to Earnings Growth

RECENT NEWS
Mondo Visione  Feb 24  Comment 
On 1 April 2015, a common market area will be implemented in southern France under the name “Trading Region South” (TRS) replacing the existing GRTgaz PEG Sud and the TIGF market areas. PEGAS, the pan- European  gas  trading  platform...
The Economic Times  Feb 24  Comment 
According to ET Now sources the government sees growth prospects bettering in the next financial year and will target a much higher growth rate of 8%.
Benzinga  Feb 23  Comment 
Below are the top stocks in the financial sector in terms of PEG ratio. Grupo Financiero Galicia S.A. (NASDAQ: GGAL) has a PEG ratio of 0.06. Grupo Financiero Galicia's trailing-twelve-month profit margin is 48.20%. Cherry Hill Mortgage...
TheStreet.com  Feb 20  Comment 
NEW YORK (TheStreet) -- Public Service Enterprise Group stock is up 3.05% to $41.51 on heavy volume in afternoon trading Friday, after the energy holding company released its 2014 fourth quarter earnings results before the opening bell this...
Benzinga  Feb 20  Comment 
Below are the top food wholesale stocks on the NYSE and the NASDAQ in terms of PEG ratio. United Natural Foods, Inc. (NASDAQ: UNFI) has a PEG ratio of 2.00. United Natural Foods' trailing-twelve-month EPS is $2.62. The Chefs' Warehouse, Inc....
TheStreet.com  Feb 19  Comment 
NEW YORK (TheStreet) --Public Service Enterprise Group Inc. is scheduled to report its 2014 fourth quarter earnings results before the market open on Friday morning. Analyst are expecting the energy holding company that operates in the...
Clusterstock  Feb 19  Comment 
Business Insider recently asked the smartest people in finance for what they considered to be the   "most important charts in the world" right now.  Former global macro fund manager Raoul Pal sent us a chart of the Chinese currency as...
Benzinga  Feb 19  Comment 
Below are the top shipping stocks on the NASDAQ in terms of PEG ratio. Golar LNG Partners LP (NASDAQ: GMLP) has a PEG ratio of 0.89. Golar LNG Partners' trailing-twelve-month EPS is $3.95. Knightsbridge Shipping Limited (NASDAQ: VLCCF) has...
Benzinga  Feb 18  Comment 
Below are the top computers wholesale stocks on the NASDAQ in terms of PEG ratio. Wayside Technology Group, Inc. (NASDAQ: WSTG) has a PEG ratio of 0.64. Wayside Technology Group's trailing-twelve-month EPS is $1.22. United Stationers Inc. ...
Financial Times  Feb 17  Comment 
Failure to imagine the possibility the Swiss franc’s euro peg would end is rank incompetence




 

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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