The PEG ratio (price/earnings-to-growth) takes the P/E ratio and divides it by the company's expected earnings growth rate. It exists to fix P/E's biggest blind spot: a high P/E isn't necessarily expensive if the company is growing fast.
PEG = P/E ÷ annual earnings growth rate (in %). Example (illustrative): a stock with a P/E of 30 growing earnings 30% a year has a PEG of 30 ÷ 30 = 1.0. A second stock with a P/E of 15 growing at just 5% has a PEG of 15 ÷ 5 = 3.0 — on P/E alone the second looks cheaper, but on PEG the first is the better value for its growth.
Live example: AAPL's current PEG ratio is 1.51 — in the broad range most established stocks trade at. See the full AAPL forecast for how this sits next to its P/E and growth profile and the quantum model's own price forecast.
A PEG near 1.0 is often treated as "fairly priced for its growth", below 1 as potentially undervalued, and well above 1 as paying up for growth. Treat these as loose guides, not laws — the number is only as good as the growth estimate feeding it, which is a forecast that's frequently too optimistic.
A PEG around 1.0 is often treated as fairly priced for its growth, below 1 as potentially cheap, and well above 1 as expensive. These are rough guides — the number is only as reliable as the growth estimate behind it.
P/E tells you how much you pay per $1 of current earnings; PEG adjusts that for how fast earnings are expected to grow. A high P/E can still have a reasonable PEG if growth is fast enough.
The growth rate is a forecast, and forecasts are often too optimistic. Small changes in the assumed growth rate move PEG a lot, and it ignores debt and cash flow — so treat it as one input.
Browse all S&P 500 tickers to see this metric applied to individual companies.
Educational research only — not investment advice.