What is a good PEG ratio? Is 2.49 good? (PEG = Price/Earnings to growth)?

Question

Thanks

Answer 1

A PEG Ratio isn't a great stat to look at when analyzing a stock because the Growth rate portion is a subjective number determined by the opinion of analysts who are employed by firms that may own the stock or have other interests.

But to answer your question, a PEG Ratio greater than 1 is not good. It would mean the PE ratio is higher than growth estimates. A PEG Ratio less than 1 is good because it means the company stock is trading at low share price in comparison with their earnings (which is the PE ratio) and that PE Ratio is less than the growth estimates.

Be careful though if a PE or PEG is too low (even below 1), there might be something wrong with the company or some other underlying reason the stock is trading so low and you might want to investigate that before you buy.

Read the Intelligent Investor Bengamin Graham for good invesiting methodologies.