The P/E divided by the companies growth rate. A PEG of 1 indicates a â€œfairâ€ price. A PEG of less than 1 is â€œcheapâ€ and a PEG greater than 1 is â€œexpensiveâ€. High PEG stocks are considered fast growers.

stock price/earnings ratio divided by its year-over-year earnings growth rate. An indicator of whether a stock is undervalued or overvalued. A stock valued fair would have a PEG ratio of 1 - its current P/E and future earnings growth rate being equal. A ratio of less than 1 can indicate that the stock is undervalued.

The PEG ratio is a valuation metric for determining how much more should be paid (in stock price) for a company's expected future growth. \left ( \frac{P/E}{Growth} \right ) It is 'generally accepted' that a (PEG = 1) is acceptable. E.g. If a company is growing at 30% a year, then it is OK to pay a P/E of 30.