how to calculate the peg ratio
peg ratio price eps eps growth where eps the earnings per share begin aligned text peg ratio frac text price eps text eps growth textbf where text eps the earnings per share end aligned peg ratio eps growthprice eps where eps the earnings per share to calculate the peg ratio an investor or analyst needs to either look up or calculate the p e ratio of the company in question the p e ratio is calculated as the price per share of the company divided by the earnings per share eps or price per share eps once the p e is calculated find the expected growth rate for the stock in question using analyst estimates available on financial websites that follow the stock plug the figures into the equation and solve for the peg ratio number as with any ratio the accuracy of the peg ratio depends on the inputs used when considering a company s peg ratio from a published source it s important to find out which growth rate was used in the calculation in an article from morgan stanley wealth management for example the peg ratio is calculated using a p e ratio based on current year data and a five year expected growth rate 1using historical growth rates for example may provide an inaccurate peg ratio if future growth rates are expected to deviate from a company s historical growth the ratio can be calculated using one year three year or five year expected growth rates for example to distinguish between calculation methods using future growth and historical growth the terms forward peg and trailing peg are sometimes used 