PEG ratio - Revision history

imported>Doug Williamson: Classify page.

2022-07-01T21:10:24Z

Classify page.

← Older revision		Revision as of 21:10, 1 July 2022
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	* [[Prospective]]		* [[Prospective]]
	* [[Ratio analysis]]		* [[Ratio analysis]]

			[[Category:Accounting,_tax_and_regulation]]
			[[Category:The_business_context]]
			[[Category:Corporate_finance]]

imported>Doug Williamson: Typo - remove duplicate 'their'.

2015-11-14T13:43:38Z

Typo - remove duplicate 'their'.

← Older revision		Revision as of 13:43, 14 November 2015
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	Like other ratios, PEG ratios will not be properly comparable unless the basis for their inputs is clear and consistent.		Like other ratios, PEG ratios will not be properly comparable unless the basis for their inputs is clear and consistent.

	PEG ratios should be treated with particular caution, as the basis for ~~their~~ determining their inputs can be very subjective.		PEG ratios should be treated with particular caution, as the basis for determining their inputs can be very subjective.

imported>Doug Williamson: Add health warning about use of PEG ratios and their calculation.

2015-11-14T08:50:18Z

Add health warning about use of PEG ratios and their calculation.

← Older revision		Revision as of 08:50, 14 November 2015
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	It is defined as:		It is defined as:

			PEG ratio = Price to earnings ratio / expected percentage rate of growth in earnings

			PEG = PER / g%


			<span style="color:#4B0082">'''Example 1'''</span>

			Company A's price to earnings ratio (PER) = 10

			The expected rate of growth of Company A's earnings (g%) = 12.5% (= 12.5 for the purposes of the PEG calculation)


			The PEG ratio = 10 / 12.5

			= 0.8.


			<span style="color:#4B0082">'''Example 2'''</span>

			Company B's price to earnings ratio (PER) = 15

			Its PEG ratio is reported as 0.95

			Calculate the expected rate of growth of Company B's earnings (g) implied by the PER of 15 and the PEG ratio of 0.95.

			''Solution''

	PEG ratio = Price to earnings ratio / expected rate of growth in earnings		PEG ratio = Price to earnings ratio / expected rate of growth in earnings

			PEG = PER / g%

			''Rearranging this relationship:''

			g% x PEG = PER

			g% = PER / PEG

			= 15 / 0.95

			= 15.8%


			Like other ratios, PEG ratios will not be properly comparable unless the basis for their inputs is clear and consistent.

			PEG ratios should be treated with particular caution, as the basis for their determining their inputs can be very subjective.

imported>Doug Williamson: Create the page. Source: Stern NYU, http://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/peg.htm

2015-11-11T17:35:13Z

Create the page. Source: Stern NYU, http://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/peg.htm

New page

Price/Earnings to Growth ratio.

The PEG ratio compares the price to earnings ratio of a company with its expected rate of growth in earnings.

It is defined as:

PEG ratio = Price to earnings ratio / expected rate of growth in earnings

== See also ==
* [[Earnings]]
* [[Earnings multiples]]
* [[Earnings per share]]
* [[Earnings yield]]
* [[Historic]]
* [[Multiples valuation]]
* [[Price to earnings ratio]]
* [[Prospective]]
* [[Ratio analysis]]