Price to Earnings Growth

RECENT NEWS
Benzinga  Oct 13  Comment 
Below are the top sporting activities stocks on the NYSE in terms of PEG ratio. Life Time Fitness (NYSE: LTM) has a PEG ratio of 1.22. Life Time Fitness' trailing-twelve-month revenue is $1.25 billion. SeaWorld Entertainment (NYSE: SEAS) has a...
Telecom Ramblings  Oct 6  Comment 
Lots of network news this Monday morning, here's a quick survey of some interesting items: PEG Bandwidth has expanded its product set to include wavelengths. They're offering 2.5G, 10G, and 100G not just in the main cities, but in the rural...
Telecom Ramblings  Oct 6  Comment 
Lots of network news this Monday morning, here's a quick survey of some interesting items: PEG Bandwidth has expanded its product set to include wavelengths. They're offering 2.5G, 10G, and 100G not just in the main cities, but in the rural...
FiercePharma  Oct 6  Comment 
OnĀ "60 Minutes," Dr. Peter Bach and Leonard Saltz deliver some sound bites that might get the general public talking--and politicians, too.
Benzinga  Oct 3  Comment 
Below are the top small-cap asset management stocks on the NYSE and the NASDAQ in terms of PEG ratio. Noah Holdings (NYSE: NOAH) has a PEG ratio of 0.33. Noah Holdings' trailing-twelve-month EPS is $1.19. Och-Ziff Capital Management Group LLC...
Benzinga  Oct 2  Comment 
Below are the top small-cap application software stocks on the NYSE and the NASDAQ in terms of PEG ratio. Sungy Mobile (NASDAQ: GOMO) has a PEG ratio of 0.26. Sungy Mobile's trailing-twelve-month EPS is $0.79. Immersion (NASDAQ: IMMR) has a...
Benzinga  Oct 1  Comment 
Below are the top small-cap independent oil & gas stocks on the NYSE and the NASDAQ in terms of PEG ratio. Triangle Petroleum (NYSE: TPLM) has a PEG ratio of 0.24. Triangle Petroleum's trailing-twelve-month EPS is $0.93. SandRidge...
Benzinga  Sep 30  Comment 
Below are the top mid-cap life insurance stocks on the NYSE and the NASDAQ in terms of PEG ratio. Reinsurance Group of America (NYSE: RGA) has a PEG ratio of 0.41. Reinsurance Group's trailing-twelve-month EPS is $8.73. Symetra Financial...
Benzinga  Sep 29  Comment 
Below are the top mid-cap railroads stocks on the NYSE and the NASDAQ in terms of PEG ratio. Trinity Industries (NYSE: TRN) has a PEG ratio of 1.27. Trinity Industries' trailing-twelve-month EPS is $3.78. Westinghouse Air Brake Technologies...
Benzinga  Sep 26  Comment 
Below are the top small-cap drug manufacturers-other stocks on the NYSE and the NASDAQ in terms of PEG ratio. DepoMed (NASDAQ: DEPO) has a PEG ratio of 0.37. DepoMed's trailing-twelve-month revenue is $222.30 million. SciClone Pharmaceuticals...




 

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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