PEG puts the P/E in context by dividing it by the earnings growth rate.
What it is
The PEG ratio adjusts the P/E ratio for how fast a company's earnings are expected to grow. It tries to answer whether a high P/E is justified by high growth. A PEG of roughly 1 is often treated as a rule-of-thumb fair value.
Why it matters
PEG helps compare fast growers against slow growers that a raw P/E would make look misleadingly cheap or expensive. Pitfalls: it is very sensitive to the growth-rate input, breaks down for companies with no growth or negative earnings, and the '1 = fair' rule is a heuristic, not a law.
How it's calculated
Divide the P/E ratio by the expected annual earnings-growth rate expressed as a whole number (for example, divide by 15 for 15% growth).
How Quintarthai uses it
Valuation multiples including P/E and growth context are available across the screener and company pages; see a stock's Ratios and Summary tabs on its company page.
Cross-border note. Because PEG depends on forecast growth, it inherits the same thinner-coverage caveat for smaller Canadian issuers as the forward P/E.
FAQ
What does a PEG below 1 mean?
It suggests the stock may be cheap relative to its expected growth, but only if the growth estimate is realistic; a low PEG built on an unrealistic growth forecast is not a real bargain.
Can PEG be negative?
Yes, if earnings or growth are negative, and in those cases the ratio is not meaningful and should be ignored.
Check your understanding
Two companies both have a P/E of 30, but Company A is expected to grow earnings 30% a year and Company B only 10%. What does the PEG ratio capture that the P/E alone misses?
PEG divides P/E by the growth rate (A: 30/30 = 1.0; B: 30/10 = 3.0), so the faster grower looks cheaper for its growth even though the raw P/E is identical; PEG does not measure debt, dividends, or reliability.