PEG Ratio Calculator

PEG Ratio Calculator

Calculate the price/earnings-to-growth ratio from a P/E ratio or from share price and EPS. Compare a target PEG, implied P/E and optional implied share price.

Optional in direct P/E mode; enables an implied target price.
Enter 18 for 18%, not 0.18.

PEG ratio formula

PEG ratio = P/E ratio ÷ expected annual EPS growth rate

Use the growth rate as a percentage number in the formula. For example, 18% is entered as 18, so a P/E of 24 gives 24 ÷ 18 = 1.333333.

When price and earnings per share are entered, P/E = share price ÷ EPS. At a selected target PEG, target P/E = target PEG × growth rate. If a current price is available, the calculator holds EPS constant to estimate the corresponding price.

Verified examples

InputsP/EPEGTarget P/EImplied price
P/E 24, growth 18%, target PEG 1.00, current price US$12024.0000001.33333318.000000US$90.00 (−25.0000%)
Price US$75, EPS US$5, growth 12%, target PEG 1.5015.0000001.25000018.000000US$90.00 (+20.0000%)
P/E 30, growth 20%, target PEG 2.00, price omitted30.0000001.50000040.000000Not available

How to use this PEG calculator

  1. Enter P/E directly, or choose price and EPS so the calculator derives P/E.
  2. Enter the expected annual EPS growth rate as a percentage number. Use a positive estimate based on a consistent forward or historical period.
  3. Enter the PEG ratio you want to compare. A target of 1.00 is common as a reference, but it is not a universal fair-value rule.
  4. Review the sensitivity table instead of relying on one growth forecast. Small changes in growth can materially change PEG and the implied price.

How to interpret PEG

PEG adds an earnings-growth estimate to the P/E ratio. A lower PEG means the entered P/E is lower relative to the entered growth rate; a higher PEG means it is higher relative to that growth assumption. This comparison is not proof that a stock is undervalued or overvalued.

Compare companies with similar industries, accounting, profitability, risk and growth quality. A target PEG is a scenario input, not a price forecast.

Limits and assumptions

  • P/E, EPS and expected growth must be positive. PEG is not meaningful in this model when earnings or expected growth are zero or negative.
  • P/E accepts values above zero through 10,000. Price and EPS accept values above zero through 1,000,000,000. Growth is limited to 1,000%; target PEG to 100.
  • Inputs accept a decimal point and up to six decimal places. Scientific notation, thousands separators and decimal commas are not supported.
  • The price-and-EPS method requires price and EPS from a compatible period and share basis. Diluted versus basic EPS can change the result.
  • Growth estimates may be forward analyst estimates, historical growth or a user scenario. Mixing definitions or periods makes comparisons unreliable.
  • Implied price holds EPS constant and changes only the valuation multiple. It excludes dividends, dilution, debt, cash, taxes, risk changes and forecast error.
  • The currency selection formats prices only. It does not perform foreign-exchange conversion.

PEG is a screening ratio, not a complete valuation model or investment recommendation. Negative earnings, negative growth and cyclical businesses require other methods.

Frequently asked questions

Why do I enter 18 instead of 0.18 for 18% growth?

The conventional PEG formula divides P/E by the percentage number. Therefore 24 ÷ 18 = 1.333333. Dividing by 0.18 would be a different scale.

What if EPS or growth is negative?

The calculator rejects zero or negative EPS and growth because the conventional PEG ratio becomes undefined or misleading. Use a valuation method designed for losses or declining earnings.

Is a PEG of 1 always fair value?

No. It is only a common reference. Risk, growth duration, margins, interest rates, capital needs and accounting quality can justify a different comparison.

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