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PEG Ratio Calculator

Calculate a company's Price/Earnings to Growth (PEG) ratio.

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Calculation Parameters

Specify your inputs below.

Calculated Result

PEG Ratio 1.54
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Expert Tip

A PEG ratio below 1.0 is traditionally considered undervalued, indicating the stock pricing has not outpaced growth potential.

How this Calculator Works

This calculator computes the PEG ratio, which adjusts the standard P/E ratio for the company's expected earnings growth rate. A PEG ratio of 1.0 suggests a fair trade valuation relative to growth; values below 1.0 suggest undervaluation. Investors use it to find growth deals.

Formula & Methodology

PEG Ratio = P/E Ratio / Annual EPS Growth Rate - P/E Ratio is the stock price divided by EPS. - Annual EPS Growth Rate is the expected earnings growth percentage (as a whole number).

Step-by-Step Calculation Example

Here is a step-by-step example showing how the calculations are performed:

A stock has a P/E ratio of 20, and its annual earnings growth rate is projected at 10%. 1. Divide the P/E ratio by the growth rate: 20 / 10 = 2.0. Result: The PEG ratio is 2.0, suggesting the stock may be overvalued relative to its growth.

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Detailed Insights & Expert Guide

ℹ️ About this Calculation

This equity research and valuation calculator evaluates corporate fundamentals, stock price multiples, cost of capital, dividend discount models, and shareholder return metrics based on SEC financial reporting and Wall Street equity analysis standards.

Variable Glossary

Input

Equity Inputs

Share price, earnings per share (EPS), dividend amount, book value, debt/equity ratio, or systematic beta coefficient.

Parameter

Valuation Output

Price-to-Earnings (P/E), EV/EBITDA multiple, Intrinsic Value ($), WACC %, or Return on Equity (ROE %).

How to Calculate Step-by-Step

1

Step 1

Input current stock price, shares outstanding, or balance sheet / income statement numbers.

2

Step 2

Enter expected growth rate, cost of equity, or market risk premium assumptions.

3

Step 3

Review calculated valuation multiples, margin of safety comparison, or required rate of return.

FAQ

What is WACC and why is it crucial for equity valuation?
Weighted Average Cost of Capital (WACC) represents a company's required average return on debt and equity capital. It is used as the hurdle rate to discount future cash flows in DCF valuation models.
How does stock Beta measure systematic risk?
A stock beta of 1.0 means price volatility matches the broader market index. Beta > 1.0 indicates higher volatility, while Beta < 1.0 reflects lower systematic volatility.
Should valuation multiples be evaluated in isolation?
No. Valuation ratios (P/E, EV/EBITDA, P/B) should always be benchmarked against industry peer groups, historical trading averages, and expected earnings growth (PEG ratio).