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PEG Ratio Calculator: Formula, Example, Sector Benchmarks

Calculate the PEG ratio in seconds (P/E divided by earnings growth): under 1 counts as cheap for its growth. With formula, example and live sector medians, free.

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Also available in German: PEG Ratio: Rechner, Formel und was ein guter Wert ist →

Inputs

P/E ratio

Also called: Price/earnings, KGV

Where to find it: Listed on any stats page.

How to derive: Share price ÷ earnings per share (EPS).

Earnings growth % p.a.

Growth rate

Also called: Growth per year

Where to find it: Analyst estimates or the company’s historical earnings/revenue growth.

How to derive: (value now ÷ value n years ago)^(1/n) − 1. Estimate conservatively!

Result, live

PEG ratio

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Rule of thumb: PEG < 1 cheap · ≈ 1 fair · > 1.5 expensive. Requires positive growth.

The PEG ratio puts a stock's P/E in relation to its earnings growth. It shows whether a high P/E is justified by fast growth. Peter Lynch used it to find growing companies at a fair price.

How the formula works

You divide the P/E by the expected earnings growth rate in percent. A P/E of 30 looks expensive, at 30% growth it isn't.

PEG = P/E ÷ earnings growth % p.a.

Example: A stock trades at a P/E of 18 and grows earnings 24% a year. PEG = 18 ÷ 24 = 0.75: growth outpaces the multiple.

How to read the result

Below 1.0: cheap, growth outpaces the valuation.
1.0 to 1.5: fairly priced.
Above 1.5: expensive relative to growth.

What to watch out for

Works only with positive growth: with losses or zero growth the ratio is meaningless.
The result stands or falls with the growth estimate; analyst forecasts are often too optimistic.
PEG ignores dividends and debt. A low PEG built on fragile growth is a trap.

PEG ratio by sector

A PEG ratio only means something next to the company's own sector: in growth sectors high P/E ratios are partly covered by growth, in mature sectors they are not. The table shows median and range for every sector from our database, updated daily.

PEG ratio by sector: median and range
Sector	Lower quartile	Median	Upper quartile	Stocks
Energy	0.61	1.08	2.09	278
Materials	0.52	1.10	2.10	532
Consumer Discretionary	0.65	1.10	1.96	802
Information Technology	0.70	1.13	2.04	723
Industrials	0.70	1.29	2.22	1,113
Communication Services	0.75	1.37	2.63	286
Health Care	0.82	1.37	2.29	421
Financials	0.85	1.38	2.30	859
Consumer Staples	0.77	1.43	2.31	413
Real Estate	0.63	1.66	3.36	400
Utilities	0.97	1.87	2.87	219

Source: the Fair Value Calculator database, 6,046 stocks with a valid value for PEG ratio, as of Oct 15, 2026. Median: half of the sector's stocks sit below it. Lower and upper quartile: 25 % sit below or above. Values move daily with prices. All valuation ratios by sector →

PEG ratio by industry and sector: all industries, quartiles, CSV →

Frequently asked questions

Which growth rate should I use?

The common choice is expected earnings growth over the next three to five years per year. Past growth only works if it is likely to continue.

Why is a PEG below 1 attractive?

You pay less than one point of valuation for each point of growth, the market has not yet fully priced in the growth.

Where do I get the P/E and growth figures?

In our Fair Value Calculator the P/E and growth rates are already on file for 35,000+ stocks, no typing required.

What value is normal in my sector?

See the table in the sector comparison section: median and range for every sector from our database, updated daily. A value near the median of the company's own sector is usual; well below or above it calls for a reason in the business model.