Calculators · PEG

PEG calculator (Peter Lynch)

PEG links valuation (P/E) to growth. See whether the price is justified by the expected growth in earnings.

An educational tool. Not a buy or sell recommendation.

Assumptions

PEG assumes growth is sustainable and reliable.
Lynch's framework is a guide, not an absolute truth.
A very high P/E makes PEG less reliable.

PEG ratio

1.33

By Lynch's framework, a PEG between 1 and 2 is close to fair value relative to growth.

PEG = 1 would require growth of 20.0%.

< 1: lagging its growth
1–2: near fair value
> 2: expensive vs growth

Formula

PEG = (P/E) / Growth (%)

Lynch's framework:
  PEG < 1  → lagging its growth
  PEG 1–2  → near fair value
  PEG > 2  → expensive vs growth

P/E: — price / earnings per share
Growth: — expected annual earnings growth (%)

PEG was popularized by Peter Lynch — a rough guide, not a standalone signal.

Frequently asked questions

What is the PEG ratio?

PEG is the P/E divided by the expected annual earnings-growth rate. It accounts for the growth the P/E alone ignores — which is why Peter Lynch favours it.

What counts as a good PEG?

As a rough guide, a PEG around 1 is seen as fair, below 1 potentially undervalued, above 2 expensive. It depends heavily on how accurate the growth estimate is.

Is this a forecast or investment advice?

No. The result is an educational illustration based on assumptions you set — not a forecast, and not investment advice or a recommendation. You make the decision.