The Arnold Fertilizer Company's stock is selling for $55 in the market and its earnings per share is $5. The company is projected to grow at a rate of 22% over the next year. What is this company's price/earnings to growth (PEG) ratio?

Question

Quizplus · Accepted Answer

The PEG ratio is calculated by dividing the P/E ratio by the growth rate. The P/E ratio is $55/$5 = 11. The growth rate is 22%. Thus, the PEG ratio is 11/22 = 0.50.

The Arnold Fertilizer Company's Stock Is Selling for $55 in the Market