Comparing Stocks by Earnings: PE and PEG Ratios

PE is the most widely used valuation metric. PEG adjusts PE for growth. Together they tell you whether you're paying a fair price for the earnings and growth you're getting.

PE RatioPEG RatioForward PEEarnings Yield

Live Result

166.67%

ƒ: pe / growth_rateraw: 1.66667

ƒ(x)

Use variable names from the panel above (e.g. FV, r, n) — or type numbers directly: 10000 / (1 + 0.08)^10

Price-to-Earnings ratio

pe = 25

growth_rate

Expected 5-year EPS growth rate (%)

growth_rate = 15

price

Stock price

price = 100

eps

Earnings per share (trailing 12 months)

eps = 4

forward_eps

Expected EPS next year

forward_eps = 5

💡 You can also enter values directly in the formula: 10000 / (1 + 0.08)^10

⬇ Export Calculation

Exports a plain .txt file with your expression, formula, all variable values, result, and educational notes — ready to paste into any report, Word doc, Notion, or Google Docs.

The exported file includes the formula in standard mathematical notation — you can paste it directly into Excel, Google Sheets, or back into FinanceSheep.

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Learn: Comparing Stocks by Earnings: PE and PEG Ratios

Relative Valuation · Educational Guide

The Core Idea

Paying $25 for every $1 of current earnings seems expensive — until you realise the company is growing 30% per year. PE without growth context is dangerous. PEG ratio solves this by dividing PE by the growth rate.

How It Works

PEG = PE / expected growth rate. PEG < 1 = potentially undervalued (paying less than $1 of PE per 1% of growth). PEG > 2 = potentially expensive. PEG = 1 is Peter Lynch's "fair value" benchmark — but like all rules of thumb, context matters.

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Real-World Example: Stock A: PE = 10, growth = 3%. PEG = 10/3 = 3.3 — expensive for slow growth. Stock B: PE = 30, growth = 25%. PEG = 30/25 = 1.2 — much more reasonable. Stock C: PE = 20, growth = 20%. PEG = 1.0 — "fair value" by Lynch's rule.

Comparing Stocks by Earnings: PE and PEG Ratios

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