PEG Ratio
A P/E ratio adjusted for the company’s earnings growth rate.
PEG = P/E Ratio ÷ Annual Earnings Growth Rate (%)
Quick PEG Ratio calculator
%
PEG Ratio
1.20
PEG = P/E Ratio ÷ Annual Earnings Growth Rate (%)
What is the PEG Ratio?
The PEG ratio divides the P/E by the earnings growth rate, so a fast-growing company with a high P/E can still look reasonably priced. Popularised by Peter Lynch.
How to interpret it
A PEG below 1 is often considered cheap relative to growth, around 1 fair, and above 1.5–2 expensive. It is a quick screen for "growth at a reasonable price".
What’s a good PEG Ratio?
< 1
Cheap for growth
1–1.5
Fair
> 2
Expensive
Below 1 is attractive; 1–1.5 is fair; above 2 suggests you’re overpaying for the growth on offer.
Common mistakes
- Using an unrealistic or one-off growth rate — use a sustainable estimate.
- Applying PEG to no-growth or cyclical companies where it breaks down.
PEG Ratio Calculator
Full interactive calculator with charts.
See it on a real stock
This ratio computed for any listed company.
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All financial ratios →For educational purposes only, not investment advice. Consult a SEBI-registered advisor before investing.