PEG Ratio Calculator
The PEG ratio refines the price-to-earnings ratio by accounting for expected earnings growth. A high P/E may be justified if earnings are growing fast, and PEG captures that. Enter the price per share, earnings per share, and expected annual earnings growth rate. The calculator computes the P/E ratio and the PEG ratio. As a rough guide, a PEG near 1 is often viewed as fairly valued, but the metric ignores risk and growth quality, so use it alongside other analysis.
PEG ratio formula
P/E ratio = price per share / earnings per share
PEG ratio = P/E ratio / earnings growth rate (in percent)
The growth rate is used as a plain number of percentage points (15, not 0.15), following the standard PEG convention. EPS and the growth rate must be positive for a meaningful ratio.
Worked example
Price $60, EPS $3, growth 15 percent per year:
- P/E = 60 / 3 = 20.00.
- PEG = 20 / 15 = 1.33.
- Signal: above 1, relatively expensive versus growth.
PEG ratio: frequently asked questions
What is the PEG ratio?
The price/earnings to growth (PEG) ratio divides a stock's price-to-earnings (P/E) ratio by its expected earnings growth rate (in percent per year). It puts the P/E in the context of growth. PEG = P/E ratio / annual earnings growth rate.
What PEG value is considered fair?
A common rule of thumb treats a PEG of about 1 as fairly valued, below 1 as potentially undervalued relative to growth, and above 1 as relatively expensive. This is only a heuristic; PEG ignores risk, dividends, and the quality and durability of growth, so it should not be used alone.
Do I divide by the growth rate as a percent or a decimal?
By convention, PEG uses the growth rate as a plain number of percentage points. For a P/E of 20 and 15 percent growth, PEG = 20 / 15 = 1.33. You do not convert 15 percent to 0.15. This calculator follows that standard convention.
Can I compute it from price and EPS directly?
Yes. If you enter price per share and earnings per share, the calculator first computes the P/E ratio as price divided by EPS, then divides that by the growth rate. Alternatively you can enter a P/E ratio directly if you already have it.
Official sources
- U.S. Securities and Exchange Commission, Investor.gov: Price-Earnings (P/E) Ratio.
- U.S. Securities and Exchange Commission, Investor.gov: Earnings Per Share (EPS).
Reviewed by the CalculatorHub team, edited by James Graham, 19 June 2026. See our methodology.