What does peg mean verb

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PEG stands for “price-earnings-growth” and it is a ratio used to measure a company’s future growth potential. The PEG ratio is calculated by dividing the stock’s price-to-earnings (P/E) ratio by its expected earnings growth rate. The PEG ratio is a useful tool for investors to gauge a stock’s potential for future growth.

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The PEG ratio is calculated by taking the stock’s P/E ratio and dividing it by its expected earnings growth rate. For example, if a stock has a P/E ratio of 20 and its expected earnings growth rate is 10%, then its PEG ratio would be 2 (20/10). This number can be interpreted as the stock’s potential for future growth. A PEG ratio of 1 indicates that the stock is fairly valued, while a PEG ratio of less than 1 suggests that the stock is undervalued. Conversely, a PEG ratio of more than 1 suggests that the stock is overvalued.

The PEG ratio is a useful tool for investors to gauge a stock’s potential for future growth. It is important to remember, however, that the PEG ratio is only one metric and should not be used in isolation. Investors should also consider other factors such as the company’s fundamentals, financials, and competitive position before making an investment decision.

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