PEG Ratio
The PEG ratio compares P/E with annual EPS growth; examples show how growth horizons, units, and forecast revisions change the result.
EPS, P/E, and PEG connect common-share earnings, market price, and expected growth while highlighting dilution and forecast risk.
Earnings per share and equity multiples connect a company’s common-share earnings with its market price. Earnings Per Share establishes the profit and weighted-average share basis. Basic and diluted EPS can differ, and share issuance or repurchases can change EPS even when total earnings move differently.
The Price-to-Earnings Ratio compares price with historical or forecast EPS. A forward multiple depends on an earnings estimate, so it can rise when that estimate falls even if the share price is unchanged. The PEG Ratio adds annual EPS growth to the comparison; growth units, forecast horizon, and the starting earnings base can materially change the result.
Keep the share class, price date, earnings period, currency, and accounting basis consistent across comparisons. Check whether dilution, unusual items, or cyclical earnings explain an apparently low multiple. These educational measures support valuation analysis, but none establishes fair value, guarantees returns, or determines whether a security is suitable for an individual.
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