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PEG Ratio Calculator
The P/E ratio adjusted for growth. Search any of 37,000+ stocks to auto-fill real price, EPS, and historical EPS growth — then see at a glance whether the valuation is justified by the growth rate.
INTERACTIVE CALCULATOR
PEG Ratio Calculator
Divide the P/E ratio by expected earnings growth to see whether a stock's valuation is justified by its growth rate.
SEARCH STOCK
Search to auto-fill price, EPS, and historical EPS growth with real data
P/E RATIO
15.0x
PEG RATIO
1.00
You're paying 15.0x earnings for a company growing earnings ~15.0% per year — 1.00x of P/E per point of growth.
<0.8
Cheap
0.8–1.2
Fair
1.2–2
Premium
2–3
Expensive
3+
Very expensive
$150.00 ÷ $10.00 = 15.0 P/E ratio
15.0 ÷ 15.0% growth = 1.00 PEG ratio
For educational purposes only. Not investment advice.
How to Use This Calculator
Enter the Stock Price and Earnings Per Share — or search a stock above to auto-fill both with real data. The calculator first computes the P/E ratio from these two numbers.
Enter the Expected EPS Growth in percent per year. When you search a stock, this is auto-filled from the average annual EPS growth over roughly the last three fiscal years — a reasonable starting point, but feel free to override it with analysts' forward estimates or your own view. The growth number is the soul of the PEG ratio, so choose it carefully.
Optionally add a Dividend Yield to also compute the PEGY ratio, which credits dividend payers for the cash they return on top of growth. You'll get the P/E, the PEG, a verdict, and the full formula breakdown with your numbers.
The PEG Formula
PEG RATIO
PEG = (Price ÷ EPS) ÷ EPS Growth Rate
PEGY RATIO
PEGY = P/E ÷ (Growth + Dividend Yield)
The PEG ratio divides a stock's P/E ratio by its expected annual earnings growth rate (as a whole number — 15% growth means dividing by 15). A stock at $150 with $10 EPS trades at a 15x P/E; if earnings grow 15% a year, the PEG is exactly 1.0 — the price matches the growth.
Peter Lynch popularized the idea in One Up on Wall Street, with the rule of thumb that the P/E ratio of any company that's fairly priced should equal its growth rate. A P/E well below the growth rate hinted at a bargain; a P/E at double the growth rate was a warning sign. For mature dividend payers he extended the formula to PEGY, adding the dividend yield to growth so companies that return cash instead of reinvesting it aren't unfairly penalized.
Reading the Result
PEG < 1
Cheap for its growth
The market is pricing in less growth than you expect. Either you've found a bargain — or your growth estimate is too optimistic.
PEG ≈ 1
Fairly priced
Lynch's equilibrium: the P/E matches the growth rate. You pay a fair price for the growth you get — returns then track earnings growth.
PEG > 2
Expensive even for the growth
You're paying more than double per point of growth. The stock needs to beat expectations just to justify today's price.
Two caveats before acting on any PEG number. First, garbage growth estimates in, garbage PEG out: the ratio is exquisitely sensitive to the growth rate in the denominator, and forward estimates are routinely too rosy. A stock that looks cheap at 25% assumed growth becomes expensive the moment reality delivers 12%.
Second, compare within a sector. Growth in a capital-light software business is worth more than the same percentage in a cyclical commodity producer, and typical PEG levels differ across industries. A PEG of 1.5 can be reasonable for a high-quality compounder and outrageous for a bank — context decides.
Frequently Asked Questions
What is a good PEG ratio?
A PEG ratio around 1.0 is the classic benchmark: the P/E matches the growth rate, so you're paying a 'fair' price for the growth. Below 0.8 suggests the stock is cheap relative to its growth; between 1.2 and 2 means you're paying a growth premium; above 2 the valuation is expensive even after crediting the growth. These are rules of thumb — quality businesses with durable growth often deserve PEGs above 1.
Should I use trailing or forward growth in the PEG ratio?
The PEG ratio is only as good as the growth number you divide by. Trailing (historical) growth is objective but backward-looking; forward (estimated) growth is what actually matters but relies on forecasts that are often wrong. This calculator auto-fills the average annual EPS growth over roughly the last three fiscal years as a starting point — override it with analysts' forward estimates or your own if you expect the trend to change.
Why is PEG better than P/E for growth stocks?
P/E alone punishes fast growers: a company growing earnings 40% a year will almost always trade at a higher P/E than one growing 5%, and comparing the raw multiples tells you nothing. PEG normalizes the P/E by the growth rate, so a 40x P/E stock growing 40% (PEG 1.0) can screen cheaper than a 15x P/E stock growing 5% (PEG 3.0). It puts fast and slow growers on the same scale.
What is the PEGY ratio?
PEGY (Price/Earnings to Growth and Dividend Yield) is Peter Lynch's refinement for dividend payers: PEGY = P/E ÷ (EPS Growth + Dividend Yield). A mature company growing 6% while paying a 4% dividend yield returns cash worth roughly 10% a year, so dividing its P/E only by the 6% growth understates its value. Enter a dividend yield in the calculator and it computes PEGY alongside PEG.
What are the limitations of the PEG ratio?
Three big ones. First, garbage in, garbage out: an optimistic growth estimate makes any stock look cheap. Second, PEG breaks down for companies with zero, negative, or wildly cyclical earnings growth — it's undefined or meaningless there. Third, it treats a percentage point of growth as equally valuable everywhere, ignoring differences in risk, capital intensity, and durability of growth. Always compare PEG within the same sector and sanity-check the growth assumption.
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This calculator is for educational purposes only and does not constitute investment advice. Auto-filled EPS growth is a historical trend, not a forecast — future growth may differ materially, and the PEG ratio should never be the sole basis for investment decisions.