PEG Ratio Calculator
Calculate the price/earnings-to-growth ratio from P/E and expected EPS growth.
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Understand this calculation
PEG relates a P/E valuation multiple to an expected earnings growth rate. It adds a growth assumption to the valuation discussion, but that assumption can be highly uncertain.
Formula
Worked example
A P/E ratio of 20 and expected EPS growth of 10% produce a PEG ratio of 2.0.
How to interpret the result
PEG can help compare valuation with expected growth, but values are not directly comparable across all industries, business models or forecast methods.
Assumptions & limitations
Growth must be positive for a conventional PEG calculation. The result is highly sensitive to the growth estimate used.
Practical context
When this calculator is useful
PEG is useful when you want to relate a P/E valuation multiple to an expected earnings-growth rate. It can provide additional context when comparing profitable growth companies whose P/E ratios differ materially.
How investors commonly use it
Investors often use PEG as a screening reference rather than a valuation rule. They compare companies with similar growth quality and business economics while checking whether the growth estimate is realistic and based on a comparable forecast horizon.
What PEG does not tell you
PEG can be misleading when growth forecasts are uncertain, temporarily elevated or negative. It does not account directly for leverage, cash flow, return on capital or the durability of growth, and different forecast sources can produce very different ratios.