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What is the price/earnings to growth (PEG) ratio?

The PEG ratio is a company’s Price/Earnings ratio divided by its earnings growth rate over a period of time (typically the next 1-3 years). The PEG ratio adjusts the traditional P/E ratio by taking into account the growth rate in earnings per share that are expected in the future.

What is PEG ratio?

The price/earnings to growth ratio (PEG ratio) is a stock's price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period.

What is a price-to-earnings- to-growth ratio (PEG)?

The price/earnings-to-growth ratio, or “PEG ratio”, addresses one of the primary weaknesses of the price-to-earnings (P/E) ratio, which is the lack of consideration for future growth. Because the P/E ratio is adjusted for the expected earnings growth rate, the PEG ratio can be viewed as a more accurate indicator of a company’s true value.

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