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PEG vs price to book

Published August 17, 2026

PEG is P/E divided by expected EPS growth in percent. A $50 share on $2.50 of earnings growing at 10 percent is a P/E of 20 and a PEG of 2. P/B on that same $50 and $20 of book is 2.50 times. Same price, two denominator families.

	PEG	P/B
Formula	P/E / g_%, with g_% in percentage points.	Price / BVPS, or market cap / book equity.
Teaching sheet	$50 / $2.50 = 20 times. Growth of 10 makes PEG 2. Earnings $250,000,000.	$50 / $20 = 2.50 times. Book equity $2,000,000,000.
When the year gets more profitable	Raise EPS to $5. P/E falls to 10. PEG falls to 1. The growth input is still 10.	P/B does not move just because EPS moved. It waits on book.
When book catches the price	PEG does not move just because book moved. It waits on EPS and the growth points.	Raise BVPS to $50 and P/B is 1. Book equity equals the $5,000,000,000 market cap.
What it is not	A book multiple, a yield, or a fair-value identity. A PEG of 1 is a convention.	A PEG, a P/E, or a liquidation bid. Book is the accounting residual.

Same price, two denominator families

PEG starts from P/E. On a $50 share with $2.50 of EPS, the multiple is 20. Expected growth of 10 percent is the number 10. PEG is $20 / 10 = 2$ . With 100,000,000 shares, market capitalisation is $5,000,000,000 and total earnings are $250,000,000.

P/B divides that same $50 by book value per share. On $20 of BVPS the multiple is 2.50. Book equity is $2,000,000,000. Divide the $5,000,000,000 cap by that book and the ratio is 2.50 again.

How the PEG ratio works owns the 2. How price to book works owns the 2.50. They share a teaching price. They are not one identity. Earnings are a year's profit. Book is the accounting residual.

One input moves PEG, the other moves P/B

Keep the $50 price, 100,000,000 shares, and 10 percent expected growth. Raise EPS to $5. P/E falls to 10. PEG falls to 1. Market cap is still $5,000,000,000. Earnings are $500,000,000. Book did not enter that arithmetic.

Keep the $50 price and 100,000,000 shares. Raise BVPS to $50. P/B is 1. Book equity is $5,000,000,000, equal to market cap. The growth points did not enter that arithmetic.

P/E against PEG is the earnings pair. P/E against P/B is the book pair. This page is PEG against book. This is educational material, not financial advice.

Worked examples

PEG 2 on a \$50 share growing at 10 percent

The share price is $50, EPS is $2.50, expected EPS growth is 10 percent, and 100,000,000 shares are outstanding. What is P/E, and what is PEG?

P/E is price over EPS: $50 / 2.50 = 20$ .
Market cap: $50 \times 100000000 = 5000000000$ , so $5,000,000,000.
Total earnings: $2.50 \times 100000000 = 250000000$ , so $250,000,000.
PEG is P/E over the growth points: $20 / 10 = 2$ .

P/E is 20. PEG is 2. Market cap is $5,000,000,000. Earnings are $250,000,000. Growth is 10 percent.

P/B 2.50 on the same \$50 price

The share price is $50, BVPS is $20, and 100,000,000 shares are outstanding. What is P/B?

P/B: $50 / 20 = 2.50$ .
Market cap: $50 \times 100000000 = 5000000000$ , so $5,000,000,000.
Book equity: $20 \times 100000000 = 2000000000$ , so $2,000,000,000.
From the totals: $5000000000 / 2000000000 = 2.50$ .

P/B is 2.50. Market cap is $5,000,000,000. Book equity is $2,000,000,000. BVPS is $20.

PEG 1 when EPS is \$5

Keep the $50 price, 100,000,000 shares, and 10 percent expected growth. EPS is now $5. What is PEG?

P/E: $50 / 5 = 10$ .
Market cap is still $5,000,000,000.
Total earnings: $5 \times 100000000 = 500000000$ , so $500,000,000.
PEG: $10 / 10 = 1$ .

P/E falls to 10. PEG falls to 1. Market cap is still $5,000,000,000. Earnings are $500,000,000.

P/B 1 when book catches the price

Keep the $50 price and 100,000,000 shares. BVPS is now $50. What is P/B?

P/B: $50 / 50 = 1$ .
Market cap is still $5,000,000,000.
Book equity: $50 \times 100000000 = 5000000000$ , so $5,000,000,000.

P/B is 1. Market cap and book equity are both $5,000,000,000. BVPS is $50.

Common questions

Are PEG and P/B the same multiple?

No. PEG is P/E over growth points. P/B is price over book. The first sheets share a $50 price and a $5,000,000,000 cap. The denominators are $2.50 of EPS and $20 of book.

Why divide PEG by 10, not 0.10?

Because the usual quote is P/E over the growth rate in percent. 20 over 10 is 2. 20 over 0.10 is 200, which nobody means.

Does a PEG of 1 match a P/B of 1?

No. PEG 1 on the third sheet is a more profitable year on a still $50 share. P/B 1 on the fourth sheet is book catching the price. They are not one identity.

Keep reading

This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.