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Saturday, May 7, 2011

Price/Earnings To Growth (PEG) Ratio

Definition: Price/Earnings To Growth (PEG or PE/G) is a ratio used to determine a stock's value while taking into account the earnings generated per share, and the company's expected growth. A lower ratio indicates that the stock is undervalued.

Formula:
PEG Ratio = Price per Earnings / Annual EPS Growth
Or,
PEG Ratio = P/E / Projected growth in earnings

Example 1:
Tammy Ltd has a P/E of 30 and

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