PEG Ratio Calculator
peg• Enter the P/E ratio and earnings growth to get the PEG ratio. • PEG < 1 undervalued, 1–2 fair, > 2 overvalued — value adjusted for growth.
Price ÷ earnings per share (EPS)
Annual EPS growth rate
PEG ratio
0.75
Undervalued
PEG is below 1 — the price looks cheap relative to earnings growth. This is the zone Peter Lynch favored.
Undervalued
< 1
Fair
1 – 2
Overvalued
> 2
What is the PEG ratio?
PEG divides the P/E ratio by the earnings growth rate (%). A P/E alone can’t tell you whether a fast-growing company deserves its price; PEG folds growth into the picture so companies growing at different rates can be compared more fairly.
Formula: PEG = P/E ÷ earnings growth (%). If the P/E is 20 and earnings grow 20% a year, the PEG is 1.0. Legendary investor Peter Lynch treated a PEG of 1 as fair, below 1 as attractive, and above 2 as pricey. This tool marks PEG < 1 undervalued, 1–2 fair, and > 2 overvalued.
PEG is not a silver bullet. The result swings with which growth number you use (trailing vs. forecast), and it breaks down for companies with zero or negative growth and for cyclical, financial, or asset-heavy stocks. Use it as one signal alongside P/E, debt, and cash flow.