PEG: drag expected growth
Drag the bar to set expected EPS growth. Price and EPS stay put, so P/E stays at 20. PEG is 20 over the growth points. Drag growth down and PEG rises. Growth of 10 means ten, not 0.10.
PEG
2.00
Expected EPS growth
10.0%
Price stays $50.00 and EPS stays $2.50, so P/E stays 20.0. Drag growth down and PEG rises. Illustrative arithmetic, not a screen or advice.
P/E
20.0x, held still so only growth moves PEG.
In short
- Drag the bar up for a higher PEG, which is slower expected growth.
- Read growth as percentage points: 10, not 0.10.
- Watch P/E stay at 20. Only the growth input is moving.
- Focus the handle and use the arrow keys to step growth.
The multiple over the growth points
PEG is P/E divided by expected EPS growth in percentage points. How the PEG ratio works is that identity, with the PEG calculator under the answer.
This picture holds the P/E still so a drag only changes growth. P/E against PEG is the pair.
A PEG of 1 is folklore, not a law
When growth points equal the multiple, PEG prints 1. That is the usual fair-reading convention. Distressed names print a low PEG because the price collapsed. This picture will not tell those two apart.
What the drag will not do
It will not switch trailing P/E for forward P/E, and it will not forecast growth. It is educational material, not financial advice.
Common questions
Why does dragging up raise PEG?
Because the bar is PEG. Higher PEG is slower growth on a fixed P/E. Arrow up steps growth down so the bar and the keys agree.
Is PEG of 2 expensive?
It is 20 over 10 on the teaching sheet. It is educational material, not a screen.
Can I drag EPS instead?
Not here. The P/E explorer holds price still and drags EPS. This picture holds the multiple still.
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.