What is a good price to earnings growth PEG?

Table of Contents

As a general rule, a PEG ratio of 1.0 or lower suggests a stock is fairly priced or even undervalued. A PEG ratio above 1.0 suggests a stock is overvalued. In other words, investors who rely on the PEG ratio look for stocks that have a P/E ratio equal to or less than the company’s expected growth rate.

What is a good price to PEG ratio?

1
PEG = Price to Earnings / Growth The PEG ratio is a shortcut for determining how cheap a stock is relative to its growth. The lower the PEG, the cheaper a stock is trading (relative to its earnings and growth in earnings). Generally, any PEG below 1 is considered very good.

What is a good price to earnings ratio for growth stocks?

A higher P/E ratio shows that investors are willing to pay a higher share price today because of growth expectations in the future. The average P/E for the S&P 500 has historically ranged from 13 to 15. For example, a company with a current P/E of 25, above the S&P average, trades at 25 times earnings.

Is PEG ratio better than PE?

Proponents of the PEG ratio allege that it is superior to the P/E ratio as a valuation metric because the P/E ratio does not take the company’s earnings growth into consideration. If a stock has a high PE in a high growth industry, PEG will level the playing field with a low-PE stock in a slower growth group.

What is a good 5 year PEG ratio?

A ratio between 0.5 and less than 1 is considered good, meaning the stock may be undervalued given its growth profile. A ratio less than 0.5 is considered to be excellent.

Is a PEG ratio of 4 good?

PEG ratios higher than 1 are generally considered unfavorable, suggesting a stock is overvalued. Conversely, ratios lower than 1 are considered better, indicating a stock is undervalued.

What is the PEG ratio of Tesla?

Valuation Measures 4

	As of Date: 3/29/2022 Current	12/31/2021
Trailing P/E	224.40	343.11
Forward P/E	111.11	121.95
PEG Ratio (5 yr expected)	3.25	2.67
Price/Sales (ttm)	23.06	25.63