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Term

PEG RATIO
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PEG Ratio is a short form for PE to Growth Ratio. This is the ratio of the PE of a stock and the growth rate (of the net profit) of the company. It is sometimes used to decide if a stock is correctly valued or not.

A lower PEG ratio means a stock is relatively undervalued, and therefore, the lower the PEG ratio, the better it is for investment.

PEG ratio is increasingly being favoured as being superior to PE ratio, as it takes into account the growth rate of a company in addition to its market price and the EPS.

Related Terms: EPS, PE Ratio, PE to Growth Ratio
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