Price to Earnings Growth

RECENT NEWS
SeekingAlpha  Sep 11  Comment 
By Michael J. Bernard: Over the course of the last few months, I have been experimenting with a few different screens to simplify identifying opportunities for buying and also help me decide more effectively when the door has been shut. One of my...
Benzinga  Sep 11  Comment 
Below are the top stocks in the services sector in terms of PEG ratio. USA Technologies (NASDAQ: USAT) has a PEG ratio of 0.06. USA Technologies' trailing-twelve-month revenue is $40.80 million. Entravision Communications (NYSE: EVC) has a PEG...
Forbes  Sep 11  Comment 
Falling commodity prices are supposed to have knocked the Australian dollar down a peg or two but as Lord Keynes warned some time ago "markets can remain irrational longer than you can remain solvent".
Benzinga  Sep 10  Comment 
Below are the top stocks in the industrial goods sector in terms of PEG ratio. Gafisa SA (NYSE: GFA) has a PEG ratio of 0.10. Gafisa's trailing-twelve-month revenue is $1.07 billion. WCI Communities (NYSE: WCIC) has a PEG ratio of 0.16. WCI...
The Economic Times  Sep 9  Comment 
FTSE 100 fell 0.3 per cent on Monday, with shares in companies with strong business ties to Scotland - such as Royal Bank of Scotland and Lloyds Banking Group - hit hard.
Benzinga  Sep 4  Comment 
Below are the top stocks in the financial sector in terms of PEG ratio. Ambac Financial Group (NASDAQ: AMBC) has a PEG ratio of 0.05. Ambac Financial's trailing-twelve-month revenue is $1.10 billion. KCG Holdings (NYSE: KCG) has a PEG ratio of...
Benzinga  Sep 2  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 revenue is $3.76 billion. Orient Paper (NYSE: ONP) has a PEG ratio of 0.11. Orient...
SeekingAlpha  Aug 28  Comment 
By Michael J. Bernard: I set up a screen following my discovery of the value possibilities of Tidewater Inc.(NYSE:TDW), looking for stocks sporting both a Sub 1 PEG ratio and a Sub 1 Price/Book profile. As commenter mbkelly75 pointed out in my...
The Economic Times  Aug 26  Comment 
Economists said uptick in industrial output, revival in consumer discretionary demand, pick-up in manufacturing and transportation sectors and power output growth would have given a boost to economic growth.
TechCrunch  Aug 26  Comment 
 Tel Aviv-based Feedvisor, an algorithmic pricing and business intelligence platform for online retailers, today announced that it has raised a $6 million Series A round led by Australia’s Square Peg Capital. Today’s announcement comes just...




 

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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