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AppleNVIDIABerkshireMetrics guide
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Metrics guide›Size and valuation

PEG ratio

P/E divided by the earnings growth rate, so a fast grower's higher P/E is put in context. Here growth is five years of diluted EPS growth.

Worked example · a round-number company

P/E20.0x÷EPS growth %20=PEG1.00

How to read it

↓Lower is better. Around 1 has long been read as a fair price for the growth.

Example Co. 1.00
Under 11 to 2Over 2

It breaks down when earnings grow slowly or shrink.

Keep in mind

  • Past growth says nothing certain about future growth.

Related

P/E ratioEarnings per share (EPS)