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Explanation: The Price/Earnings to Growth (PEG) ratio is a valuation metric that compares a company’s price-to-earnings (P/E) ratio to its earnings growth rate. It provides investors with a measure of a stock’s valuation relative to its earnings growth potential. A PEG ratio below 1 typically suggests that the stock may be undervalued relative to its growth prospects, while a PEG ratio above 1 may indicate overvaluation.
Example: TCS has a PEG ratio of 2.27. This indicates that the company’s stock price is trading at approximately 2.27 times its earnings growth rate. Analysing the PEG ratio helps investors assess whether TCS’s stock is priced reasonably relative to its earnings growth potential. A PEG ratio above 1 may suggest that the stock is overvalued compared to its growth prospects, while a PEG ratio below 1 may indicate potential undervaluation.
You can view PEG Ratio for any company on Radar under Probability Ratios in the Ratios section.