Tomotto

PEG Ratio

Hello everyone,

Quick script to check the PEG Ratio.

What is PEG Ratio?
The price/ earnings to growth ratio (PEG Ratio) is a stock's price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period. The PEG ratio is used to determine a stock's value while also factoring in the company's expected earnings growth, and is thought to provide a more complete picture than the more standard P/E ratio .

A PEG Ratio greater than 1.0 means that the stock is overvalued, while below 1.0 means is is undervalued. When the PEG Ratio is exactly 1.0, then the stock is trading at fair valuation.

Formula:
PEG Ratio = (Price / EPS ) / EPS Growth

Examples:

Company A:
  • Price per share = $46
  • EPS this year = $2.09
  • EPS last year = $1.74
Company B
  • Price per share = $80
  • EPS this year = $2.67
  • EPS last year = $1.78

Company A
  • P/E ratio = $46 / $2.09 = 22
  • Earnings growth rate = ($2.09 / $1.74) - 1 = 20%
  • PEG ratio = 22 / 20 = 1.1
Company B
  • P/E ratio = $80 / $2.67 = 30
  • Earnings growth rate = ($2.67 / $1.78) - 1 = 50%
  • PEG ratio = 30 / 50 = 0.6

The company A is overvalued whiled the B is undervalued.

In this script an overvalued stock is considered when the PEG Ratio is above 1.1, while it is 0.9 for an undervalued stock.

Only works with Stocks.

Happy trading,
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Commentaires

Do you know of a way to calculate this "manually"? Price is a bar-by-bar change so presumably this can be calculated on a bar-by-bar basis (not just through FQ/FY financials).
+1 Répondre
getting a resolve error while applying this code.
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Tomotto BeardedQuant
@BeardedQuant, Is the Pine Version set to 4?
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@Tomotto, mine is set to 4, but I'm still getting the resolve error. Do you know how I can fix this?
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Tomotto Intermarketics
@Intermarketics, Can you tell me which stock you're trying to apply this script on?
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@Tomotto, AAPL
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Tomotto Intermarketics
@Intermarketics, couldn't find anything yet. I'll continue to look
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@Tomotto, thank you
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Intermarketics Intermarketics
@Intermarketics, Never mind, I solved the issue. Thanks though
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