Price-to-Earnings Growth Ratio

The Price-to-Earnings Growth (PEG) Ratio is a financial metric that helps evaluate a company's value relative to its expected earnings growth. It’s calculated by dividing the Price-to-Earnings (P/E) ratio by the company's projected earnings growth rate. A lower PEG suggests that a stock may be undervalued and could offer better growth potential for its current price. Conversely, a high PEG might indicate overvaluation or excessive growth expectations. Investors use the PEG to assess whether a stock's price aligns reasonably with its growth prospects, aiding in more informed investment decisions.