π Growth-Adjusted Valuation
PEG Ratio Calculator
Price/Earnings to Growth β Growth Stock Valuation
Calculate PEG ratio instantly. Determine if a growth stock's valuation is justified by its earnings growth rate. Enter P/E and growth rate, or derive directly from stock price and EPS.
Trailing PEGForward PEGPeter Lynch Method
NSE Β· BSENASDAQ Β· NYSEGrowth Investing
Example:
PEG Ratio Inputs
P/E Ratio
Market Price Γ· EPS
Γ
1Γ100Γ
EPS Growth Rate
Annual earnings growth %
%
0.1%60%
Industry Avg PEG
Sector benchmark
Γ
0.1Γ4Γ
π Calculate P/E from Stock Data
PEG Zone Indicator
1.50
PEG Ratio
PEG Scale (0 β 3+)
0 Underval.1.0 Fair2.0 Over3+ Extreme
βοΈ
Growth Valuation
Fair Value
PEG near 1.0 β fair for growth rate
Comparison
Stock PEG
1.50
Industry
1.20
Lynch Fair
1.00
PEG Ratio
1.50Γ
P/E Γ· Growth%
Valuation
Fair Value
vs industry PEG
Implied Fair P/E
24.0Γ
Growth% Γ Ind PEG
Growth Premium
+25.0%
Actual vs implied P/E
Real-World PEG Examples β Click to Load
What Is the PEG Ratio? Formula & Explanation
PEG Ratio = P/E Ratio Γ· EPS Growth Rate (%)
Implied Fair P/E = EPS Growth Rate Γ Industry Average PEG
Growth Premium = ((Actual P/E β Implied P/E) Γ· Implied P/E) Γ 100%
Example: P/E = 30Γ, Growth = 20% β PEG = 30 Γ· 20 = 1.5Γ
Implied Fair P/E = EPS Growth Rate Γ Industry Average PEG
Growth Premium = ((Actual P/E β Implied P/E) Γ· Implied P/E) Γ 100%
Example: P/E = 30Γ, Growth = 20% β PEG = 30 Γ· 20 = 1.5Γ
The PEG ratio was popularized by Peter Lynch, the legendary Fidelity Magellan fund manager who delivered 29.2% annual returns from 1977β1990. Lynch famously said a stock with PEG of 1.0 is fairly priced for its growth β a principle used by value investors worldwide to find growth at a reasonable price (GARP investing).
PEG Ratio Interpretation Guide
| PEG Range | Interpretation | Investor Signal | Typical Example |
|---|---|---|---|
| < 0.5 | Deeply Undervalued | Strong buy signal β rare opportunity | Deep value or overlooked growth stock |
| 0.5 β 1.0 | Undervalued | Attractive β growth exceeds P/E premium | Cyclical recovery, beaten-down quality stock |
| 1.0 β 1.5 | Fair Value | Fairly priced β Lynch's sweet spot | Steady compounder, blue chip growth |
| 1.5 β 2.0 | Slightly Overvalued | Premium β needs strong execution to justify | Quality franchise with brand moat |
| 2.0 β 3.0 | Overvalued | High risk β growth must materially beat estimates | Hyped growth stock, momentum name |
| > 3.0 | Extremely Overvalued | Speculation β P/E far exceeds growth rate | Bubble territory, pre-revenue speculative |
PEG vs P/E β When to Use Each
| Metric | Best For | Limitation | Example Use |
|---|---|---|---|
| P/E Ratio | Mature, stable earnings companies; sector comparison | Ignores growth β misleading for high-growth stocks | HDFC Bank, ITC, Hindustan Unilever |
| PEG Ratio | Growth stocks; comparing companies with different growth rates | Meaningless if EPS growth is negative or near zero | TCS, Bajaj Finance, D-Mart, Delhivery |
| Both together | Full picture β P/E shows absolute valuation, PEG shows growth-adjusted value | Still misses quality of earnings, competitive moat | Full stock analysis workflow |
PEG Ratios of Well-Known Stocks (Approximate)
| Stock | Market | Approx P/E | Approx Growth% | PEG | View |
|---|---|---|---|---|---|
| TCS | NSE | 26Γ | 10% | 2.6Γ | Premium IT franchise |
| Bajaj Finance | NSE | 30Γ | 25% | 1.2Γ | Fair for growth quality |
| D-Mart (Avenue Supermarts) | NSE | 80Γ | 20% | 4.0Γ | Premium for execution track record |
| Infosys | NSE | 24Γ | 8% | 3.0Γ | Slow growth limits PEG attractiveness |
| Apple (AAPL) | NASDAQ | 28Γ | 12% | 2.3Γ | Services margin re-rating |
| Alphabet (GOOGL) | NASDAQ | 22Γ | 18% | 1.2Γ | Reasonable for AI exposure |
| Coal India | NSE | 6Γ | 5% | 1.2Γ | Cheap but slow growth |
Common Mistakes When Using PEG Ratio
The PEG ratio is powerful but easily misused. Watch for these pitfalls in your analysis.
Using inconsistent time periods is a major error β if your P/E is trailing (last 12 months actual EPS) but your growth rate is forward-looking (next 12 months estimates), the PEG is not comparable. Always use trailing P/E with trailing growth, or forward P/E with forward growth estimates.
PEG fails for negative or very low growth. A company with 2% EPS growth will have an astronomically high PEG even if P/E is reasonable β PEG is designed for growth companies, not mature or declining businesses. Use P/B or EV/EBITDA instead for low-growth names.
PEG ignores earnings quality. A company growing earnings by cutting costs is very different from one growing by expanding revenue and market share. Always check the source of EPS growth β revenue growth, margin expansion, or financial engineering?
Frequently Asked Questions
What is a good PEG ratio?βΎ
Peter Lynch considered a PEG ratio of 1.0 as "fair value" β meaning the P/E equals the growth rate. Below 1.0 is potentially undervalued; above 1.0 means you're paying a premium. However, high-quality businesses with durable competitive moats (like D-Mart or NestlΓ© India) consistently trade at PEG of 2β4Γ because the market pays up for predictability and brand strength. Context matters more than the raw number.
Why is PEG better than P/E for growth stocks?βΎ
P/E alone can be misleading. A stock trading at 40Γ P/E looks expensive β but if it's growing earnings at 40%/year, PEG = 1.0 (fair value). Meanwhile a stock at 15Γ P/E with 5% growth has PEG = 3.0 (expensive relative to growth). PEG provides the "growth-adjusted" view, making cross-company and cross-sector comparisons more meaningful for growth investors.
Should I use trailing or forward EPS growth for PEG?βΎ
Both have uses. Trailing PEG (historical 3β5 year EPS growth) is based on facts β more conservative and reliable. Forward PEG (next 1β3 year consensus analyst estimates) reflects future expectations β more relevant for valuation but dependent on estimate accuracy. Most professional analysts use a blend: 3-year historical growth as a baseline, adjusted for near-term guidance. For India, Screener.in and Tickertape provide both TTM EPS and forward estimates.
What is "GARP" investing and how does PEG help?βΎ
GARP stands for Growth At a Reasonable Price β a hybrid investing style between pure value and pure growth. GARP investors use PEG as their primary screening tool, seeking stocks with: (1) consistent earnings growth (15β25%+/year), (2) P/E not more than 1.5β2Γ the growth rate (PEG β€ 1.5), and (3) strong business fundamentals. Peter Lynch, Philip Fisher, and many Buffett disciples use GARP principles. It avoids the trap of buying cheap junk (pure value) OR expensive momentum (pure growth).
When does PEG ratio not work?βΎ
PEG breaks down in several scenarios: (1) Negative EPS growth β makes PEG negative, meaningless. (2) Near-zero growth (under 3-5%) β PEG becomes extremely high even for cheap stocks. (3) Highly cyclical industries (metals, energy) where EPS swings wildly year-to-year. (4) Early-stage companies with no earnings. (5) Financial companies where P/B or P/AUM are more standard. In these cases, use EV/EBITDA, P/B, P/S, or DCF valuation instead.
How do I find EPS growth rate for Indian stocks?βΎ
For Indian stocks, free sources include: Screener.in (5-year EPS CAGR in company financials), Tickertape.in (growth rates on stock page), NSE/BSE annual reports, Moneycontrol EPS history. For US stocks: Macrotrends.net shows 10-year EPS history, Yahoo Finance shows analyst growth estimates under "Analysis" tab. For the most reliable PEG, use 3-year or 5-year historical EPS CAGR as your growth input β it's fact-based and harder to manipulate.
Is this PEG ratio calculator free?βΎ
100% free, no registration required. Works for stocks on NSE, BSE, NYSE, NASDAQ, LSE, ASX, or any market. Enter P/E and growth rate directly, or use the auto-calculator to derive P/E from market price and EPS. Includes real-world examples of Indian and global stocks preloaded.
π Growth-Adjusted Valuation
PEG Ratio Calculator
Price/Earnings to Growth β Growth Stock Valuation
Calculate PEG ratio instantly. Determine if a growth stock's valuation is justified by its earnings growth rate. Enter P/E and growth rate, or derive directly from stock price and EPS.
Trailing PEGForward PEGPeter Lynch Method
NSE Β· BSENASDAQ Β· NYSEGrowth Investing
Example:
PEG Ratio Inputs
P/E Ratio
Market Price Γ· EPS
Γ
1Γ100Γ
EPS Growth Rate
Annual earnings growth %
%
0.1%60%
Industry Avg PEG
Sector benchmark
Γ
0.1Γ4Γ
π Calculate P/E from Stock Data
PEG Zone Indicator
1.50
PEG Ratio
PEG Scale (0 β 3+)
0 Underval.1.0 Fair2.0 Over3+ Extreme
βοΈ
Growth Valuation
Fair Value
PEG near 1.0 β fair for growth rate
Comparison
Stock PEG
1.50
Industry
1.20
Lynch Fair
1.00
PEG Ratio
1.50Γ
P/E Γ· Growth%
Valuation
Fair Value
vs industry PEG
Implied Fair P/E
24.0Γ
Growth% Γ Ind PEG
Growth Premium
+25.0%
Actual vs implied P/E
Real-World PEG Examples β Click to Load
What Is the PEG Ratio? Formula & Explanation
PEG Ratio = P/E Ratio Γ· EPS Growth Rate (%)
Implied Fair P/E = EPS Growth Rate Γ Industry Average PEG
Growth Premium = ((Actual P/E β Implied P/E) Γ· Implied P/E) Γ 100%
Example: P/E = 30Γ, Growth = 20% β PEG = 30 Γ· 20 = 1.5Γ
Implied Fair P/E = EPS Growth Rate Γ Industry Average PEG
Growth Premium = ((Actual P/E β Implied P/E) Γ· Implied P/E) Γ 100%
Example: P/E = 30Γ, Growth = 20% β PEG = 30 Γ· 20 = 1.5Γ
The PEG ratio was popularized by Peter Lynch, the legendary Fidelity Magellan fund manager who delivered 29.2% annual returns from 1977β1990. Lynch famously said a stock with PEG of 1.0 is fairly priced for its growth β a principle used by value investors worldwide to find growth at a reasonable price (GARP investing).
PEG Ratio Interpretation Guide
| PEG Range | Interpretation | Investor Signal | Typical Example |
|---|---|---|---|
| < 0.5 | Deeply Undervalued | Strong buy signal β rare opportunity | Deep value or overlooked growth stock |
| 0.5 β 1.0 | Undervalued | Attractive β growth exceeds P/E premium | Cyclical recovery, beaten-down quality stock |
| 1.0 β 1.5 | Fair Value | Fairly priced β Lynch's sweet spot | Steady compounder, blue chip growth |
| 1.5 β 2.0 | Slightly Overvalued | Premium β needs strong execution to justify | Quality franchise with brand moat |
| 2.0 β 3.0 | Overvalued | High risk β growth must materially beat estimates | Hyped growth stock, momentum name |
| > 3.0 | Extremely Overvalued | Speculation β P/E far exceeds growth rate | Bubble territory, pre-revenue speculative |
PEG vs P/E β When to Use Each
| Metric | Best For | Limitation | Example Use |
|---|---|---|---|
| P/E Ratio | Mature, stable earnings companies; sector comparison | Ignores growth β misleading for high-growth stocks | HDFC Bank, ITC, Hindustan Unilever |
| PEG Ratio | Growth stocks; comparing companies with different growth rates | Meaningless if EPS growth is negative or near zero | TCS, Bajaj Finance, D-Mart, Delhivery |
| Both together | Full picture β P/E shows absolute valuation, PEG shows growth-adjusted value | Still misses quality of earnings, competitive moat | Full stock analysis workflow |
PEG Ratios of Well-Known Stocks (Approximate)
| Stock | Market | Approx P/E | Approx Growth% | PEG | View |
|---|---|---|---|---|---|
| TCS | NSE | 26Γ | 10% | 2.6Γ | Premium IT franchise |
| Bajaj Finance | NSE | 30Γ | 25% | 1.2Γ | Fair for growth quality |
| D-Mart (Avenue Supermarts) | NSE | 80Γ | 20% | 4.0Γ | Premium for execution track record |
| Infosys | NSE | 24Γ | 8% | 3.0Γ | Slow growth limits PEG attractiveness |
| Apple (AAPL) | NASDAQ | 28Γ | 12% | 2.3Γ | Services margin re-rating |
| Alphabet (GOOGL) | NASDAQ | 22Γ | 18% | 1.2Γ | Reasonable for AI exposure |
| Coal India | NSE | 6Γ | 5% | 1.2Γ | Cheap but slow growth |
Common Mistakes When Using PEG Ratio
The PEG ratio is powerful but easily misused. Watch for these pitfalls in your analysis.
Using inconsistent time periods is a major error β if your P/E is trailing (last 12 months actual EPS) but your growth rate is forward-looking (next 12 months estimates), the PEG is not comparable. Always use trailing P/E with trailing growth, or forward P/E with forward growth estimates.
PEG fails for negative or very low growth. A company with 2% EPS growth will have an astronomically high PEG even if P/E is reasonable β PEG is designed for growth companies, not mature or declining businesses. Use P/B or EV/EBITDA instead for low-growth names.
PEG ignores earnings quality. A company growing earnings by cutting costs is very different from one growing by expanding revenue and market share. Always check the source of EPS growth β revenue growth, margin expansion, or financial engineering?
Frequently Asked Questions
What is a good PEG ratio?βΎ
Peter Lynch considered a PEG ratio of 1.0 as "fair value" β meaning the P/E equals the growth rate. Below 1.0 is potentially undervalued; above 1.0 means you're paying a premium. However, high-quality businesses with durable competitive moats (like D-Mart or NestlΓ© India) consistently trade at PEG of 2β4Γ because the market pays up for predictability and brand strength. Context matters more than the raw number.
Why is PEG better than P/E for growth stocks?βΎ
P/E alone can be misleading. A stock trading at 40Γ P/E looks expensive β but if it's growing earnings at 40%/year, PEG = 1.0 (fair value). Meanwhile a stock at 15Γ P/E with 5% growth has PEG = 3.0 (expensive relative to growth). PEG provides the "growth-adjusted" view, making cross-company and cross-sector comparisons more meaningful for growth investors.
Should I use trailing or forward EPS growth for PEG?βΎ
Both have uses. Trailing PEG (historical 3β5 year EPS growth) is based on facts β more conservative and reliable. Forward PEG (next 1β3 year consensus analyst estimates) reflects future expectations β more relevant for valuation but dependent on estimate accuracy. Most professional analysts use a blend: 3-year historical growth as a baseline, adjusted for near-term guidance. For India, Screener.in and Tickertape provide both TTM EPS and forward estimates.
What is "GARP" investing and how does PEG help?βΎ
GARP stands for Growth At a Reasonable Price β a hybrid investing style between pure value and pure growth. GARP investors use PEG as their primary screening tool, seeking stocks with: (1) consistent earnings growth (15β25%+/year), (2) P/E not more than 1.5β2Γ the growth rate (PEG β€ 1.5), and (3) strong business fundamentals. Peter Lynch, Philip Fisher, and many Buffett disciples use GARP principles. It avoids the trap of buying cheap junk (pure value) OR expensive momentum (pure growth).
When does PEG ratio not work?βΎ
PEG breaks down in several scenarios: (1) Negative EPS growth β makes PEG negative, meaningless. (2) Near-zero growth (under 3-5%) β PEG becomes extremely high even for cheap stocks. (3) Highly cyclical industries (metals, energy) where EPS swings wildly year-to-year. (4) Early-stage companies with no earnings. (5) Financial companies where P/B or P/AUM are more standard. In these cases, use EV/EBITDA, P/B, P/S, or DCF valuation instead.
How do I find EPS growth rate for Indian stocks?βΎ
For Indian stocks, free sources include: Screener.in (5-year EPS CAGR in company financials), Tickertape.in (growth rates on stock page), NSE/BSE annual reports, Moneycontrol EPS history. For US stocks: Macrotrends.net shows 10-year EPS history, Yahoo Finance shows analyst growth estimates under "Analysis" tab. For the most reliable PEG, use 3-year or 5-year historical EPS CAGR as your growth input β it's fact-based and harder to manipulate.
Is this PEG ratio calculator free?βΎ
100% free, no registration required. Works for stocks on NSE, BSE, NYSE, NASDAQ, LSE, ASX, or any market. Enter P/E and growth rate directly, or use the auto-calculator to derive P/E from market price and EPS. Includes real-world examples of Indian and global stocks preloaded.