PEG Ratio Calculator
### Equity Valuation & Growth Investment Metrics The **Price-to-Earnings-to-Growth (PEG) Ratio** refines the standard P/E ratio by incorporating a company's expected earnings growth rate into its.
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📐 Formula
💡 Practical Example
Evaluating a growth stock priced at $150.00 with $6.00 EPS, 15.0% expected EPS growth, and 2.0% dividend yield: Yields a 25.00x P/E ratio, 1.67x PEG ratio, and 1.47x PEGY ratio.
📖 About PEG Ratio Calculator
Equity Valuation & Growth Investment Metrics
The Price-to-Earnings-to-Growth (PEG) Ratio refines the standard P/E ratio by incorporating a company's expected earnings growth rate into its valuation, providing a balanced metric for evaluating growth stocks.
Core PEG & PEGY Equations
- Price-to-Earnings Ratio: P/E = Stock PriceEPS
- Standard PEG Ratio: PEG = P/EAnnual EPS Growth Rate (\%)
- Dividend-Adjusted PEGY Ratio: PEGY = P/EEPS Growth Rate (\%) + Dividend Yield (\%)
Peter Lynch Valuation Benchmark Rules
- PEG < 1.0: Stock is considered undervalued relative to its earnings growth rate.
- PEG = 1.0: Stock is considered fairly valued.
- PEG > 1.0: Stock is considered overvalued or trading at a premium for market dominance.
Trailing PEG vs Forward PEG
Investors can compute Trailing PEG using past 12-month historical growth rates or Forward PEG using estimated 3-to-5 year Wall Street analyst consensus earnings projections. Comparing both metrics reveals whether earnings momentum is accelerating or decelerating over upcoming fiscal quarters.
How to Use This Calculator
Enter your Current Stock Share Price (e.g. 150 in ), Earnings Per Share (EPS) (e.g. 6.00 in ), Expected Annual EPS Growth Rate (e.g. 15.0 in %), and Annual Dividend Yield (e.g. 2.0 in %). Results update instantly as you type — adjust any value to compare scenarios.
The Formula
PEG Ratio = PE / Growth_Rate_Percentage (e.g. 25 / 15 = 1.67)
PEGY Ratio = PE / (Growth_Rate + Dividend_Yield)
Worked Example
Evaluating a growth stock priced at 150.00 with 6.00 EPS, 15.0% expected EPS growth, and 2.0% dividend yield: Yields a 25.00x P/E ratio, 1.67x PEG ratio, and 1.47x PEGY ratio.
Understanding Your Result
Percentages are relative values — context determines what is "good" or "bad." A 50% discount is significant; a 50% failure rate is alarming. Percentage change and percentage points are different: moving from 4% to 5% is a 1 percentage point increase, but a 25% relative increase. When comparing percentages across different base values, always check whether absolute differences are meaningful — a 10% improvement on a large base creates more absolute value than 10% on a small base.
💡 Mathematical Rigor & Applied Context
- This calculator applies exact mathematical definitions following conventions established by NIST and international standards bodies.
- Rounding errors accumulate across multi-step calculations. For precision-critical work, maintain extra significant figures through all intermediate steps.
- Many mathematical concepts have multiple valid formulations — if a result seems unexpected, verify which convention or definition applies to your context.
- Dimensional analysis (unit tracking) is the fastest way to catch formula errors. Every term in an equation must have consistent, compatible units.
- Numerical methods used in digital calculators introduce floating-point precision limits (~15 significant digits for IEEE 754 double precision).
- For statistical and probabilistic calculations, always specify whether you are working with population parameters or sample statistics — formulas differ.
- Visualizing a problem geometrically or testing with known boundary values (zero, infinity, negative) reveals hidden errors faster than algebraic checking.
- When in doubt, validate your result against a simplified hand calculation or a published worked example from a textbook or standards document.
Results are for informational and educational purposes only. Always verify critical decisions with a qualified professional.