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The 'PEG ratio' (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share , and the company's expected growth.
NVDA PE Ratio (Forward) data by YCharts Based on these numbers, Nvidia's PEG ratio is 1.2 versus Broadcom's 1.8. Remember, this ratio only tells you how much you pay for potential growth.
The PEG ratio, which divides the company's price-to-earnings multiple by its estimated growth rate, does. PLTR PEG Ratio Chart. PLTR PEG Ratio data by YCharts. Here, ...
PLTR PE Ratio data by YCharts. Palantir's PEG ratio is a hefty 13. For reference, I generally buy high-quality stocks at PEG ratios up to 2 to 2.5. Even if Palantir grows earnings twice as fast as ...
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.
A PEG ratio under 1 is usually considered undervalued, but growth stocks will often command PEG ratios well above 1. NVDA PE Ratio (Forward 1y) Chart NVDA PE Ratio (Forward 1y) data by YCharts.
The PEG ratio can be useful because it accounts for earnings growth over the course of several years. A general rule of thumb is that a PEG ratio above 1 signals the stock could be overvalued ...
Not all multiples are based on earnings or cash flow drivers. The price-to-book ratio (P/B) is a commonly used benchmark comparing market value to the accounting book value of the firm's assets. The price/sales ratio and EV/sales ratios measure value relative to sales. These multiples must be used with caution as both sales and book values are ...