StocksResult
📝 What is PEG Ratio?
📊 What is PEG Ratio?
Imagine you’re buying a mobile phone 📱.
✔️ One costs ₹20,000 but gives you great features.
✔️ Another costs ₹15,000 but has fewer features.
So, you think — "Is the cheaper one really better?"
The same question arises when you see a stock with a low price or low P/E Ratio.
But is it growing fast enough?
To answer this — investors use the PEG Ratio! 🎯
💡 What is PEG Ratio?
✔️ PEG = Price to Earnings Growth Ratio
It tells you if a stock is fairly priced based on how fast it is growing.
👉 Formula:
PEG Ratio= P/E Ratio ÷ Earnings Growth Rate (%)
🧐 Why is PEG Ratio Important?
✔️ A low P/E ratio may seem good, but if the company is not growing, it’s not a great deal.
✔️ A high P/E stock may be worth it if the company is growing very fast!
PEG helps balance both price and growth.
✅ PEG Ratio Meaning:
✔️ PEG < 1 = Possibly undervalued 👍
✔️ PEG = 1 = Fairly valued 😐
✔️ PEG > 1 = Overvalued (maybe expensive) 🚨
📈 Simple Example:
Company A:
✔️ P/E = 20
✔️ Growth Rate = 25%
👉 PEG = 20 ÷ 25 = 0.8 (good)
Means this stock may be undervalued with good growth potential! 🚀
💥 Why Use PEG Ratio?
✔️ Combines price & growth — better than just P/E.
✔️ Useful for finding fast-growing companies at reasonable price.
✔️ Helps avoid value traps — cheap stocks that aren’t really growing.
🚧 Be Careful!
❌ PEG works best for companies with steady growth.
❌ Avoid using PEG for cyclical or unpredictable businesses.
❌ Estimated growth rates may not always be accurate — double check! ✔️✔️
🎯 In Short:
👉 PEG = P/E ÷ Growth Rate
👉 Helps you find growing stocks at good prices.
👉 Best PEG = Less than 1 (but check company quality too!).
“Price is what you pay. Value is what you get.” — PEG helps you balance both! 🏦✨