🧮 PEG Ratio Calculator – Find Fair Value of Stocks Instantly

Understanding whether a stock is truly undervalued or overpriced is one of the biggest challenges for investors. The PEG Ratio (Price/Earnings to Growth Ratio) is a powerful metric that helps answer this question.

Our free PEG Ratio Calculator simplifies this process — just enter the current price, earnings per share (EPS), and expected growth rate to instantly see whether a stock is undervalued (🟢), fairly valued (🟡), or overvalued (🔴).

📘 What is PEG Ratio?

The PEG Ratio stands for Price-to-Earnings-to-Growth Ratio. It’s a refinement of the P/E (Price-to-Earnings) ratio that factors in a company’s growth rate, giving investors a clearer picture of its valuation.

While the P/E ratio tells you how much investors are willing to pay for each rupee of earnings, it doesn’t consider how fast those earnings are growing. The PEG ratio fixes that.

📊 Formula:

PEG Ratio=P/E Ratio/Expected Earnings Growth Rate​

or equivalently:

PEG Ratio=(Price per Share/EPS)/Growth Rate

💡 Why PEG Ratio Matters

The PEG ratio gives a more realistic measure of valuation than P/E alone. A high P/E stock with fast growth might still be fairly valued, while a low P/E stock with no growth could be a trap.

✅ Quick Summary:

⚙️ How to Use the PEG Ratio Calculator

Using our online tool is simple:

Once you hit “Calculate,” you’ll instantly get:

• P/E Ratio

• PEG Ratio

• Interpretation (with color code)

The result visually shows whether a stock is undervalued 🟢, fairly valued 🟡, or overvalued 🔴, helping you make faster, data-backed investment decisions.

So go ahead now and checkout your stock fair valuation by using the below PEG Ratio calculator

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Reverse DCF (Implied Growth) Calculator – Find Market’s Expected Growth Rate

🧠 How to Calculate PEG Ratio (Step-by-Step)

Let’s break down how to calculate it manually:

1. Find EPS (Earnings Per Share):
   Available in company financials or stock research portals.

2. Find Current Market Price:
   Use the latest market price of the stock.

3. Estimate Expected Annual Growth Rate (%):
   Based on analyst estimates or company projections.

4. Plug into Formula:

   PEG Ratio=(Price/EPS)/Growth Rate​

​

🧾 Example:

• Price: ₹500

• EPS: ₹24

• Expected Growth: 12%

P/E=500/24=20.83

PEG = 20.83 / 12 = 1.74

✅ Result: PEG = 1.74 → 🔴 Overvalued

📉 PEG Ratio vs P/E Ratio: What’s the Difference?

Example:

• Company A: P/E = 20, Growth = 20% → PEG = 1 → Fairly Valued

• Company B: P/E = 20, Growth = 10% → PEG = 2 → Overvalued

Both have the same P/E ratio, but different growth prospects — hence different valuations.

💰 Why Investors Love the PEG Ratio

1. Balances Value and Growth: Combines two powerful factors — valuation and growth.

2. Easier Comparison: Helps compare companies within the same sector.

3. Quick Decision Tool: Instant insight for screening stocks.

4. Eliminates P/E bias: Avoids overvaluing high-growth companies.

⚠️ Limitations of the PEG Ratio

While useful, the PEG ratio isn’t perfect:

• Growth Rate Uncertainty: Future projections may be inaccurate.

• Sector Differences: Comparing across industries isn’t ideal.

• Negative EPS: PEG cannot be computed for loss-making companies.

• Ignoring Other Factors: Debt, cash flow, or ROE aren’t included.

👉 Pro Tip: Use PEG along with other metrics like ROE, Debt-to-Equity, and Free Cash Flow for a more complete valuation picture.

🏭 PEG Ratio Benchmarks by Sector

These ranges can vary with market conditions and economic cycles.

💬 PEG Ratio Examples for Investors

🟢 Example 1: Undervalued Stock

• Price = ₹100

• EPS = ₹10

• Growth = 20%
  → P/E = 10 → PEG = 10 / 20 = 0.5 → Undervalued

🟡 Example 2: Fairly Valued Stock

• Price = ₹200

• EPS = ₹10

• Growth = 20%
  → P/E = 20 → PEG = 1 → Fairly Valued

🔴 Example 3: Overvalued Stock

• Price = ₹600

• EPS = ₹20

• Growth = 10%
  → P/E = 30 → PEG = 3 → Overvalued

📊 PEG Ratio Interpretation Chart

🧩 Pro Tips for Using the PEG Ratio

1. Always cross-check growth projections from multiple sources.

2. Compare PEG across the same industry only.

3. A low PEG doesn’t always mean a bargain — verify fundamentals.

4. Combine PEG with ROE, Debt Ratio, and Cash Flow metrics.

5. Avoid using PEG for cyclical or loss-making companies.

❓ Frequently Asked Questions (FAQs)

1. What is a good PEG ratio?
A PEG ratio below 1 is considered good — it indicates that a stock may be undervalued relative to its growth potential.

2. Can a PEG ratio be negative?
Yes, if the company’s EPS or growth rate is negative, but such values are not meaningful for analysis.

3. Is PEG ratio better than P/E ratio?
Yes, PEG is more insightful because it adjusts valuation for earnings growth, while P/E looks only at current earnings.

4. How is growth rate calculated for PEG?
Typically, analysts use projected EPS growth for 1–5 years, based on company or sector estimates.

5. Should I use PEG for all types of companies?
No. Avoid using PEG for companies with negative earnings or irregular growth patterns, like startups or cyclical businesses.

6. Can PEG ratio change over time?
Yes — it fluctuates with price movements, EPS updates, and revised growth estimates.

🧭 Conclusion

The PEG Ratio is one of the most reliable and easy-to-understand valuation tools for investors. It bridges the gap between value investing and growth investing, helping you find the right balance between price and performance.

Use the PEG Ratio Calculator above to quickly analyze whether your favorite stocks are undervalued, fairly valued, or overvalued, and make smarter investment choices.

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⚠️ Disclaimer

This PEG Ratio Calculator and related information are provided for educational and informational purposes only. It should not be considered financial advice. Investors should conduct their own research or consult a licensed financial advisor before making any investment decisions.