P/E and PEG Ratio Calculator
Calculate P/E and PEG from share price, earnings per share, and an entered growth rate. See how the percentage point convention affects the result.
How P/E and PEG are calculated
The price to earnings ratio divides share price by earnings per share. The PEG ratio divides P/E by the earnings growth rate entered as a percentage point number. Enter 20 to represent 20% growth, not 0.20.
P/E is available only when EPS is positive. PEG also requires a positive growth assumption. A zero or negative EPS makes both ratios unavailable. With positive EPS and zero or negative growth, P/E remains available while PEG is not calculated.
For a share price of 50 USD and EPS of 2.50 USD per share, P/E is 20. With entered annual growth of 15 percentage points, PEG is 20 ÷ 15 = 1.3333. The displayed band is 1 to 1.5.
Treat P/E and PEG as compact comparison ratios. A useful comparison needs a consistent EPS basis, growth period, currency, and accounting context across the companies being compared.
Step by step
- Enter the share price, EPS per share, and an earnings growth assumption in percentage points.
- Review P/E, PEG when applicable, and the numeric band for the PEG result.
- Change one input at a time. Keep the EPS basis and growth period consistent when comparing companies.
Worked example
Example inputs: share price 50 USD, EPS 2.50 USD per share, and annual earnings growth 15 percentage points, meaning 15%.
P/E is 50 ÷ 2.50 = 20. PEG is 20 ÷ 15 = 1.3333. The displayed band is 1 to 1.5. The band describes the numeric range only, not whether the share is cheap or attractive.
When to use these ratios
Use these ratios when you have a share price, positive EPS, and a clearly defined earnings growth assumption, and want to compare price with earnings and entered growth.
Check the EPS basis, growth period, currency, and accounting context before comparing companies. Review other financial measures when those ratios do not address your question.
Common input errors
Enter growth as percentage points: 20 means 20%, not 0.20. Divide P/E by that entered number. Using a decimal growth rate would produce a PEG value one hundred times larger.
Check that share price and EPS use the same currency and share basis. Use a growth assumption that refers to the same earnings measure and a clearly chosen time period.
Formula
P/E = Share price ÷ EPS, when EPS > 0
PEG = P/E ÷ Growth rate in percentage points, when growth > 0
Band: PEG < 1, PEG from 1 through 1.5, or PEG > 1.5
Growth is entered in percentage points, so 15 represents 15%. Ratios retain full precision in the calculation and are rounded only for display. The three PEG bands are descriptive numeric ranges.
Model limits
Growth is an assumption you enter, not a forecast supplied by this calculator. PEG is unavailable when EPS is zero or negative, or when growth is zero or negative. P/E can still be shown for positive EPS when growth is unavailable. The numeric bands are illustrative ranges, not valuation rules. The calculation omits cash flow, debt, taxes, dividends, and business quality.
Key terms
- Price to earnings ratio
- Share price divided by positive earnings per share. If EPS is zero or negative, this calculator leaves P/E unavailable.
- PEG ratio
- P/E divided by an entered earnings growth rate expressed in percentage points. It is unavailable when EPS or growth is not positive.
- Growth percentage points
- The number entered is used directly as percentage points. For example, enter 20 for 20% annual growth. It is a manual assumption, not a retrieved forecast.
Related valuation tools
Use the Enterprise Value Calculator when debt and cash matter to the valuation, ROE DuPont Analysis to examine return components, or the Dividend Discount Model when dividends are central to the question.
These tools use different inputs and answer different questions. P/E and PEG summarize price relative to earnings and an entered growth assumption. They do not replace a cash flow valuation or an analysis of the balance sheet.
FAQ
What does the PEG ratio calculate?
It divides P/E by the growth percentage points you enter. For example, a P/E of 20 and growth of 15% gives 20 ÷ 15 = 1.3333. The result depends on the chosen growth assumption and EPS basis.
Should I enter 20 or 0.20 for 20% growth?
Enter 20. The formula divides P/E by the growth rate as percentage points, so 20 represents 20%. Entering 0.20 would make the PEG result one hundred times larger.
What happens when EPS is zero or negative?
P/E and PEG are unavailable because this calculation requires positive EPS. The tool does not convert a loss into a zero ratio or treat it as a low valuation.
What happens when growth is zero or negative?
PEG is unavailable because the denominator must be positive. If EPS is positive, P/E can still be shown. A negative or zero growth input is not replaced with a PEG value of zero.
Are the PEG ranges valuation advice?
No. The labels group results below 1, from 1 through 1.5, and above 1.5. They are descriptive ranges and do not establish fair value or compare business risk.
Related tools
The Enterprise Value Calculator includes debt and cash in its valuation inputs. ROE DuPont Analysis separates return components. The Dividend Discount Model focuses on dividends. Each uses a different model from P/E and PEG.