Price to Earnings Growth

RECENT NEWS
Benzinga  Jul 2  Comment 
Below are the top telecom services-foreign stocks on the NYSE and the NASDAQ in terms of PEG ratio. Orange SA (ADR) (NYSE: ORAN) has a PEG ratio of 1.11. Orange's trailing-twelve-month EPS is $0.45. China Telecom Corporation Limited (ADR) ...
Benzinga  Jul 1  Comment 
Below are the top large-cap data storage devices stocks on the NYSE and the NASDAQ in terms of PEG ratio. Seagate Technology PLC (NASDAQ: STX) has a PEG ratio of 1.13. Seagate's trailing-twelve-month EPS is $5.75. EMC Corporation (NYSE:...
Benzinga  Jun 30  Comment 
Below are the top mid-cap apparel stores stocks on the NYSE and the NASDAQ in terms of PEG ratio. Urban Outfitters, Inc. (NASDAQ: URBN) has a PEG ratio of 1.21. Urban Outfitters' trailing-twelve-month EPS is $1.69. DSW Inc. (NYSE: DSW) has...
Benzinga  Jun 29  Comment 
Below are the top small-cap agricultural chemicals stocks on the NYSE and the NASDAQ in terms of PEG ratio. China Green Agriculture, Inc (NYSE: CGA) has a PEG ratio of 0.21. China Green Agriculture's trailing-twelve-month EPS is $0.82. ...
The Hindu Business Line  Jun 26  Comment 
Britain’s top equity index lost ground on Friday as weaker mining stocks weighed on the market, although supermarket group Tesco rose after its sales fell less than forecast. Tesco
Benzinga  Jun 26  Comment 
Below are the top heavy construction stocks on the NYSE in terms of PEG ratio. Tutor Perini Corp (NYSE: TPC) has a PEG ratio of 0.95. Tutor Perini's trailing-twelve-month EPS is $1.97. Fluor Corporation (NEW) (NYSE: FLR) has a PEG ratio of...
Benzinga  Jun 25  Comment 
Below are the top marketing services stocks on the NYSE and the NASDAQ in terms of PEG ratio. Inuvo Inc (NYSE: INUV) has a PEG ratio of 1.74. Inuvo's trailing-twelve-month EPS is $0.09. RetailMeNot Inc (NASDAQ: SALE) has a PEG ratio of...
Benzinga  Jun 24  Comment 
Below are the top farm & construction machinery stocks on the NYSE in terms of PEG ratio. CNH Industrial NV (NYSE: CNHI) has a PEG ratio of 0.79. CNH Industrial's trailing-twelve-month EPS is $0.59. Caterpillar Inc. (NYSE: CAT) has a PEG...




 

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.
Please install Flash Player to view this chart.
Please install Flash Player to view this chart.
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki