Definition: What is the Price/Earnings to Growth (PEG) Ratio?
PEG Ratio is called Price Earnings to Growth Ratio. It is used to measure the stock value base on the company’s current earning and potential future growth. In other words, by using the ratio investors calculate whether the stock in over or under pricing by considering the today company’s earning and growth rate that the company will achieve in the future.
PEG ratio is the improved version of the P/E ratio. For different reason both these ratios used by the investors. Investors do not rely on 1 calculation and for the perfect result, they use both ratios. Both investment use to find whether the investment is good or bad so look both calculations is important.
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