PEG ratio

The PEG ratio ('Price/Earnings to Growth') divides the P/E by expected annual earnings growth in percent. It tries to relate valuation to growth. Example: P/E 30, expected growth 30% per year → PEG = 1. A P/E of 30 alone looks 'expensive', but versus that growth it looks fair. Rule of thumb: PEG below 1 is attractive, above 2 is expensive. But: growth is an estimate. If it shifts, PEG shifts dramatically. Only one piece of the puzzle.