P/E and PEG Ratio Calculator
Calculate the price-to-earnings (P/E) ratio and the growth-adjusted PEG ratio from share price, EPS, and expected growth, with a valuation read. Educational. Runs in your browser.
PEG above ~1.5 — the price is high relative to expected growth, which can mean overvaluation or that the market expects more than your growth estimate.
The price-to-earnings (P/E) ratio is share price divided by earnings per share — how many dollars investors pay per dollar of annual earnings. The PEG ratio divides P/E by the expected earnings-growth rate to put the multiple in context: a high P/E can be justified by fast growth. A PEG near 1.0 is the traditional fair-value benchmark, below 1.0 potentially cheap, above expensive. Both depend on the growth estimate and on comparing to industry peers. Educational, not investment advice; everything runs in your browser.
About this tool
The price-to-earnings (P/E) ratio is the most widely quoted stock valuation multiple: share price divided by earnings per share. It tells you how many dollars investors are currently willing to pay for each dollar of a company's annual earnings — a P/E of 20 means the market values the stock at twenty times its per-share profit. On its own, though, P/E says nothing about growth, and that is its big limitation: a fast-growing company can deserve a far higher P/E than a stagnant one, so comparing P/E ratios across companies with very different growth prospects is misleading. The PEG ratio fixes this by dividing the P/E by the expected earnings-growth rate (in percent per year). The idea, popularized by investor Peter Lynch, is that a fairly valued growth stock should have a PEG around 1.0 — meaning you are paying roughly one unit of P/E for each point of growth. A PEG below 1.0 may flag a stock that is cheap relative to its growth, while a PEG well above 1.0 suggests the price already bakes in a lot of optimism. The catch is that PEG is only as good as the growth estimate fed into it, and growth forecasts are uncertain; it also breaks down for companies with negative or near-zero earnings or growth. Both ratios are most useful compared against direct industry peers and the company's own history rather than as absolute verdicts. This is educational, not investment advice. Everything runs in your browser; nothing is uploaded.
How to use it
- Enter the current share price.
- Enter earnings per share (EPS) — trailing or forward, but be consistent.
- Enter the expected annual EPS growth rate as a percentage.
- Read the P/E and PEG; use the note and peer comparisons to interpret them.
Frequently asked questions
- How is the P/E ratio calculated?
- P/E = share price ÷ earnings per share. A $100 stock with $5 EPS has a P/E of 20, meaning investors pay $20 for each $1 of annual earnings.
- How is the PEG ratio calculated?
- PEG = P/E ÷ expected annual earnings-growth rate (in percent). A P/E of 20 with 20% growth gives a PEG of 1.0; with 10% growth it is 2.0. It adjusts the P/E for how fast earnings are expected to grow.
- What is a good PEG ratio?
- The classic benchmark, attributed to Peter Lynch, is that a PEG around 1.0 is fairly valued, below 1.0 potentially undervalued, and above expensive. It is a rule of thumb, not a precise rule, and depends heavily on the growth estimate.
- Why can P/E be misleading on its own?
- Because it ignores growth. A high P/E may be justified for a rapidly growing company and unjustified for a stagnant one. PEG was designed to make P/E comparable across companies growing at different rates.
- When does PEG break down?
- When earnings or expected growth are negative or near zero, the ratio becomes negative or extreme and stops being meaningful. PEG only applies to profitable companies with positive expected growth.
- Is anything uploaded?
- No. All calculations run entirely in your browser.