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The rate is expressed as a percent value, and should use real growth only, to correct for inflation.For example, if a company is growing at 30% a year in real terms, and has a P/E of 30.00, it would have a PEG of 1.00.
Stock B is trading at a forward P/E of 30 and expected to grow at 25%. The PEG ratio for Stock A is 75% (15/20) and for Stock B is 120% (30/25). According to the PEG ratio, Stock A is a better purchase because it has a lower PEG ratio, or in other words, its future earnings growth can be purchased for a lower relative price than that of Stock B.
Moreover, the two chips stocks have similar projected long-term earnings growth rates, 35% for Nvidia, 38% for AMD. At a PEG ratio (P/E versus growth), Nvidia stock ends up looking fairly priced ...
Palantir trades at a price-to-earnings (P/E) ratio of over 620, with an estimated long-term earnings growth rate of almost 26%. That gives it a lofty price/earnings-to-growth (PEG) ratio of more ...
A PEG ratio takes a company's potential earnings growth into account. A reading of less than 1 means that a stock is undervalued with respect to the bottom-line growth that it could deliver over ...
The Federal Reserve responded to decline in earnings growth by cutting the target Federal funds rate (from 6.00 to 1.75% in 2001) and raising them when the growth rates are high (from 3.25 to 5.50 in 1994, 2.50 to 4.25 in 2005).
Finance, Nvidia's PEG ratio, based on its expected growth rate for the next five years, currently sits at 0.96, suggesting that is a deal given the current outlook from analysts.
Data source: Company filings, Yahoo! Finance, author calculations. PEG ratio = ratio of price-to-earnings to growth rate. As you can see, despite its larger market capitalization, Rolls-Royce is ...