P/E vs PEG Ratio
P/E prices current earnings; PEG adjusts that multiple for earnings growth. Use P/E for stable peer comparisons and PEG when growth is positive and reasonably predictable.
| Measure | P/E | PEG |
|---|---|---|
| Measures | Price per unit of earnings | P/E relative to growth |
| Best for | Stable profitable peers | Growing profitable companies |
| Main weakness | Ignores growth | Depends on a reliable growth rate |
| Avoid when | Earnings are negative | Growth is negative or volatile |