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How do you calculate a stocks PEG ratio?

Updated: 9/11/2023
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WriteClub

Lvl 1
16y ago

Best Answer

The formula for PEG is (Price/future Earnings)/estimated Growth rate. For instance, if the price of a stock was $100 and it was expected to earn $10 over the next 12 months, its P/E ratio would be 10. Then, if the company was expected to grow at an annualized rate of 20% over the next five years, this would give the company a PEG of .500. Generally, the lower the PEG the better. However, because you are looking at future earnings and estimated growth rates, this metric is not as concrete as others, like Price/Book for example. This ratio can be found on any finance website, including Yahoo! and Google.

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16y ago
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Q: How do you calculate a stocks PEG ratio?
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