What is PEG ratio?
After the price-earnings (PE) ratio, the most popular tool for judging whether a stock's valuation is attractive is the price-earnings-to-growth ratio (PEG ratio). The PE is the numerator while the stock's earnings growth rate is the denominator. If the PEG ratio is below one, the stock's valuation is considered reasonable while if it is above one, investors should approach it with caution.
Why use PEG ratio instead of PE?
The PE ratio compares the price of the stock to its earnings per share. A stock's PE is compared with that of other
After the price-earnings (PE) ratio, the most popular tool for judging whether a stock's valuation is attractive is the price-earnings-to-growth ratio (PEG ratio). The PE is the numerator while the stock's earnings growth rate is the denominator. If the PEG ratio is below one, the stock's valuation is considered reasonable while if it is above one, investors should approach it with caution.
Why use PEG ratio instead of PE?
The PE ratio compares the price of the stock to its earnings per share. A stock's PE is compared with that of other
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