ruly PEG ratio calculator
The PEG ratio divides the P/E by the expected growth in earnings per share. It helps compare companies that do not grow at the same pace.
The formula
PEG = P/E / expected annual growth in earnings per share, in points (15 for 15%). PEGY = P/E / (growth + dividend yield).
How to read the result
A PEG of 1 means the P/E equals the expected growth rate. The lower the PEG, the less each point of expected growth costs as an earnings multiple. The PEGY takes the dividend into account, useful for a company that pays out a large part of its earnings.
Limits of the calculation
The PEG depends entirely on expected growth, which remains a forecast. It says nothing about the quality of that growth, the debt or how steady earnings are. It reads poorly for very low or very high growth.
Glossary entries
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