Fidamen

PEG Ratio Calculator

The PEG ratio (Price/Earnings to Growth) is a valuation metric that adjusts the P/E ratio by the expected annual earnings growth, enabling comparison across companies with different growth profiles. It is commonly used to identify whether a stock's price fairly reflects its growth prospects.

This tool supports three calculation modes: using a reported P/E and growth rate, deriving P/E from price and EPS, and computing PEGY that adds dividend yield to growth for dividend-paying companies. Enter growth as an annual percentage and review the guidance below for accuracy limits and safe usage.

Updated Nov 25, 2025QA PASS — golden 25 / edge 120Run golden-edge-2026-01-23

Governance

Record d5d2a5c6aaa4 • Reviewed by Fidamen Standards Committee

Calculate PEG using a directly supplied P/E ratio and an expected annual earnings growth rate.

Inputs

Advanced inputs

From reported P/E

From price & EPS

PEGY (include dividend)

Results

Updates as you type

PEG ratio

75

OutputValueUnit
PEG ratio75—
Primary result75

Visualization

Methodology

Core calculation: PEG = (P/E) ÷ (expected annual earnings growth as a decimal). Use growth rates expressed as percentage points converted to decimals (for example, 20% = 0.20).

When computing P/E from price and EPS, use the latest available EPS figure and note whether it is trailing-twelve-month (TTM), forward, or adjusted EPS; mixing bases will invalidate results. For PEGY, dividend yield is added to the growth rate to reflect total shareholder return contribution.

Quality controls and safe handling: the calculator warns about division by zero and negative or extremely small growth rates. It does not substitute for detailed financial models. Use audited financials for EPS and credible analyst or company guidance for growth forecasts. Follow institutional data-validation practices aligned with ISO 9001 quality principles and apply secure handling of data consistent with NIST guidance for integrity controls.

Worked examples

Example 1 (From reported P/E): Reported P/E = 15, expected growth = 20%. PEG = 15 ÷ 0.20 = 75. Interpret with context: very high PEG suggests price far exceeds growth expectations or inputs are inconsistent.

Example 2 (From price & EPS, PEGY): Price = 100, EPS = 5 ⇒ P/E = 20. Growth = 10%, dividend yield = 2% ⇒ PEGY = 20 ÷ (0.10 + 0.02) = 166.67. High values indicate aggressive valuation relative to combined growth and yield.

F.A.Q.

What is a 'good' PEG ratio?

No single threshold is universal. A PEG near 1 has historically been interpreted as price roughly matching growth expectations, but sector, stage of company (growth vs mature), and the reliability of growth forecasts matter. Compare peers using the same growth basis (TTM vs forward).

Can growth be negative or zero?

Yes. Zero or negative growth leads to undefined or negative PEG results; the calculator will flag division-by-zero or near-zero denominators. Interpret negative PEG cautiously: it may reflect declining earnings and requires deeper analysis beyond this metric.

Should I use trailing or forward earnings growth?

Be consistent: mix neither trailing EPS with forward growth nor different time horizons. State clearly whether growth is TTM, next-12-months, or a multi-year CAGR, and prefer consensus analyst or company guidance for forward estimates.

What are the calculator's accuracy limits?

Calculated results depend entirely on input quality. Rounding and floating-point arithmetic follow common binary IEEE 754 semantics; very large or small numbers may exhibit representational rounding. Always cross-check critical valuations with independent systems and audited data.

Is this tool a buy/sell recommendation?

No. This tool provides a valuation metric for analysis and is not financial, tax, or investment advice. Use it alongside comprehensive models and consult licensed professionals for decisions.

Sources & citations

Further resources

External guidance

Versioning & Change Control

Audit record (versions, QA runs, reviewer sign-off, and evidence).

Record ID: d5d2a5c6aaa4

What changed (latest)

v1.0.0 • 2025-11-25 • MINOR

Initial publication and governance baseline.

Why: Published with reviewed formulas, unit definitions, and UX controls.

Public QA status

PASS — golden 25 + edge 120

Last run: 2026-01-23 • Run: golden-edge-2026-01-23

Engine

v1.0.0

Data

Baseline (no external datasets)

Content

v1.0.0

UI

v1.0.0

Governance

Last updated: Nov 25, 2025

Reviewed by: Fidamen Standards Committee (Review board)

Credentials: Internal QA

Risk level: low

Reviewer profile (entity)

Fidamen Standards Committee

Review board

Internal QA

Entity ID: https://fidamen.com/reviewers/fidamen-standards-committee#person

Semantic versioning

  • MAJOR: Calculation outputs can change for the same inputs (formula, rounding policy, assumptions).
  • MINOR: New features or fields that do not change existing outputs for the same inputs.
  • PATCH: Bug fixes, copy edits, or accessibility changes that do not change intended outputs except for previously incorrect cases.

Review protocol

  • Verify formulas and unit definitions against primary standards or datasets.
  • Run golden-case regression suite and edge-case suite.
  • Record reviewer sign-off with credentials and scope.
  • Document assumptions, limitations, and jurisdiction applicability.

Assumptions & limitations

  • Uses exact unit definitions from the Fidamen conversion library.
  • Internal calculations use double precision; display rounding follows the unit's configured decimal places.
  • Not a substitute for calibrated instruments in regulated contexts.
  • Jurisdiction-specific rules may require official guidance.

Change log

v1.0.0 • 2025-11-25 • MINOR

Initial publication and governance baseline.

Why: Published with reviewed formulas, unit definitions, and UX controls.

Areas: engine, content, ui • Reviewer: Fidamen Standards Committee • Entry ID: 457eecc64d71