Learn / Fundamentals / Valuation / PEG Ratio
PEG = P/E ÷ Earnings Growth Rate (%)
This number asks whether a stock's price looks fair once you factor in how fast profits are growing. P/E alone ignores growth; PEG folds it in.
01 Feel it first
P/E stays locked at 40×. Tap a growth preset card — slow, steady, or fast — and watch PEG = 40 ÷ growth. Below 1.0 reads cheap; above reads pricey.
02 Break the intuition
A high P/E can still be the better deal when growth is real. Guess which is cheaper after growth, then peel the cards.
03 Dial it in
Drag P/E and growth. Watch PEG move across cheap, fair, and pricey bands.
PEG = 40 ÷ 40 = 1.00. A 40× stock growing 40% lands near 1.0; a 12× stock growing 4% lands near 3.0. Growth can flip which multiple is the deal.
04 Watch the path
Pick Company A or Company B. Press Play and watch earnings compound for six years.
Earnings index starting at 100
Pick a path, then press Play to watch the years fill in.
05 Two flavors
Same formula, different growth number. One looks at history. The other looks at forecasts.
06 The bands
Rough bands, not rules. Always check the industry and whether the growth number is believable.
07 Check yourself
08 Where it breaks
If earnings are falling, growth is negative and PEG breaks. The formula needs growth you can divide by.
EPS growth can be juiced by buybacks (company buys its own shares), one-time gains, or accounting changes. PEG inherits that fiction.
A single bounce after a bad year inflates growth and makes PEG look cheap. Smooth the base over a few years.
A PEG of 1.5 can look rich for a utility and normal for software. Compare within similar companies.
Pull up any ticker with live P/E, growth context, and peer multiples — then screen the market for growth-adjusted value.
At 40× earnings and 15% growth, PEG is 2.67. Above 1.0 means the market already expects a lot from that growth rate.