The Price/Earnings-To-Growth Ratio (PEG)

The Price/Earnings-to-Growth (PEG) ratio is a stock's valuation metric that helps investors determine the value of a stock while also taking into account the company's expected earnings growth. The PEG ratio is calculated by dividing the Price/Earnings (P/E) ratio by the company's expected earnings growth rate over a specified period, usually the next 3 to 5 years.

PEG Ratio=Price Earnings Ratio divided by the Annual EPS Growth Rate
PEG < 1: Typically, this suggests the stock might be undervalued or at least fairly valued in relation to its earnings growth, making it potentially a good buy. The stock's price isn't high compared to its earnings growth.
PEG = 1: This indicates that the stock's price is aligned with its growth rate, suggesting the stock might be fairly valued.
PEG > 1: Here, the stock might be overvalued as the price is high relative to the earnings growth; investors might be paying too much for the expected growth.

The PEG ratio provides a more nuanced view than just the P/E ratio by incorporating growth, which can be particularly insightful for valuing growth stocks or companies expected to experience significant changes in earnings growth. However, like all financial metrics, it should be used in conjunction with other analyses for a comprehensive investment decision.