The PEG ratio for a company with a stock price of $40, P/E ratio of 10 and an EPS annual earnings growth rate of 12% is _____ . Base on the PEG ratio, the firm is _____ ?

Question

Quizplus · Accepted Answer

The PEG ratio is calculated as the P/E ratio divided by the growth rate. Here, it's 10 / 12 = 0.833. A PEG ratio below 1 typically suggests a stock is undervalued relative to its earnings growth.

The PEG Ratio for a Company with a Stock Price