Price to Earnings Growth

RECENT NEWS
Euromoney  Aug 19  Comment 
Bets of a re-peg of the Hong Kong dollar has resurfaced in the currency markets as the Hong Kong Monetary Authority (HKMA) intervened to inject dollar liquidity to the tune of $9.86 billion several times since July 1 on the back of large inflows...
Benzinga  Aug 19  Comment 
Below are the top diversified communication services stocks on the NASDAQ in terms of PEG ratio. RRSat Global Communications Network (NASDAQ: RRST) has a PEG ratio of 0.81. RRSat Global Communications' trailing-twelve-month EPS is...
Benzinga  Aug 18  Comment 
Below are the top apparel stores stocks on the NASDAQ in terms of PEG ratio. Francesca's Holdings (NASDAQ: FRAN) has a PEG ratio of 0.91. Francesca's trailing-twelve-month EPS is $0.98. Destination Maternity (NASDAQ: DEST) has a PEG ratio of...
Benzinga  Aug 15  Comment 
Below are the top recreational vehicles stocks on the NYSE in terms of PEG ratio. Thor Industries (NYSE: THO) has a PEG ratio of 0.82. Thor's trailing-twelve-month EPS is $3.17. Winnebago Industries (NYSE: WGO) has a PEG ratio of 0.97....
Benzinga  Aug 14  Comment 
Below are the top housewares & accessories stocks on the NYSE and the NASDAQ in terms of PEG ratio. Helen of Troy (NASDAQ: HELE) has a PEG ratio of 1.35. Helen of Troy's trailing-twelve-month EPS is $2.77. Newell Rubbermaid (NYSE: NWL) has a...
Telecom Ramblings  Aug 13  Comment 
The wireless backhaul specialist PEG Bandwith is putting resources into its intercity links. This morning they announced a new, more direct 100G Ethernet route between Dallas, Texas and Jackson, MS. The 400 mile route includes a new buildout of...
Benzinga  Aug 13  Comment 
Below are the top hospitals stocks on the NYSE in terms of PEG ratio. Concord Medical Services Holdings (NYSE: CCM) has a PEG ratio of 1.18. Concord Medical's trailing-twelve-month EPS is $0.33. Select Medical Holdings (NYSE: SEM) has a PEG...
Benzinga  Aug 12  Comment 
Below are the top foreign regional banks stocks on the NYSE in terms of PEG ratio. Banco Macro SA (NYSE: BMA) has a PEG ratio of 0.55. Banco Macro's trailing-twelve-month EPS is $6.48. Banco Bradesco SA (NYSE: BBD) has a PEG ratio of 0.64....
Benzinga  Aug 11  Comment 
Below are the top education & training services stocks on the NASDAQ in terms of PEG ratio. American Public Education (NASDAQ: APEI) has a PEG ratio of 0.72. American Public Education's trailing-twelve-month EPS is $2.31. ATA (NASDAQ: ATAI)...




 

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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