How do you calculate Price /Earnings/Growth (P/E/G) Ratio?

Question

How do you calculate Price /Earnings/Growth (P/E/G) Ratios?
If you could sho wan example that would help a lot, Thanks.
Let's say Ford stock.

Answer 1

Sorry, can't do it with Ford -- they have negative earnings, so the P/E ratio is meaningless. However, using IBM as an example, just go to the "Analyst Estimates" page under Yahoo! Finance and they have the PEG ratio as well as the items needed to compute it:

http://finance.yahoo.com/q/ae?s=ibm

Towards the bottom of the page, you'll find the PEG ratio:

"PEG Ratio (avg. for comparison categories)"

You'll also find it's components just above that line:

"Price/Earnings (avg. for comparison categories)"
"Next 5 Years (per annum)"

In the case of IBM:

-- P/E = 15.3
-- Next 5 year growth rate = 10%
-- PEG Ratio = 15.3 / 10 = 1.53

...which matches what they have for the PEG ratio.

Answer 2

First of all you determine the PE ratio. Take the Price and divide it by the earnings. Then the next part is a little tricky because it involve looking into the future. You attempt to determine the expected growth rate of the company over the next 5 years. See! I told you it was tricky. Heck. Who even knows if the company will still be around in 5 years. Anyway, you take the PE ratio and divide it by the expected growth rate expressed in %. If the number is less than 1.0, the company is thought to be a decent value. If it is over 1.5 the company is thought to be a poor value. Who knows what the company's value is if the result is between 1.0 and 1.5?