The ideal PEG ratio is a financial ratio that is used to compute a company’s expected growth.
It is calculated by taking the price per earnings ratio and dividing it by the earnings growth rate over one to three years.
The PEG ratio is the P/E ratio adjusted to take into account the growth rate in earnings per share (EPS) anticipated in the future.
joe lusardi It provides a complete picture of the stock’s value versus standard P/E ratios.A company anticipates growing its earnings, cash flow, and revenue at a higher rate than a company with fewer opportunities to grow.
rounding top reversal pattern Value companies often have lower P/E ratios than growth companies.
High near-term valuations do not necessarily pose a problem when investors see the growth potential.How much then are investors willing to pay for growth?