Valuation
PEG Ratio
PEG adjusts the P/E ratio for how fast earnings are expected to grow.
A P/E of 40 looks expensive until you notice earnings are expected to double. PEG divides that P/E by the growth rate so a fast grower and a slow compounder can sit on something closer to the same scale. A PEG near 1 is the old rule of thumb for 'price and growth are in balance.' Below 1 is the hunting ground for growth-at-a-reasonable-price investors. Above 2 usually means you are paying a premium for a story.
The weakness is the growth input. Use a multi-year expected rate, not one noisy quarter. Negative earnings or a negative growth rate make PEG meaningless, so Stocklytics leaves it blank in those cases. Always check whether the growth rate is trailing or forecast before you trust the ratio.
Formula
PEG = P/E ÷ expected annual earnings growth rate (in percent)
Live example
Apple Inc. (AAPL) last printed at $345.33 with a market cap of $5.04T. Apply the formula on this page to that live price. Where the quote is missing an input, the stock page's financials are the next place to read it.
Related
P/E Ratio · Forward P/E · Earnings Per Share (EPS)
See it on a list: best stocks · screener
Questions
Is PEG under 1 always a buy?
No. The growth rate can be wrong, and the earnings in the P/E can be a one-off. PEG is a screen, then you read the filings.
What growth rate does PEG use?
A forward PEG uses expected earnings growth. A trailing PEG uses historical growth. They answer different questions and should not be mixed.