Price-Earnings Growth Ratio

(redirected from Price Earnings Growth Ratio)

Price-Earnings Growth Ratio

A ratio of a stock's price to its increase in earnings over a given period of time. This is used in place of the price-earnings ratio in situations where the company has poor earnings that are gradually increasing. That is, PREG is most useful when the raw data on earnings may not show the company's fundamental strength or potential profitability. It is used often for dot-coms and other companies that may have poor earnings in their first few years of operation.
References in periodicals archive ?
More recently, the price earnings growth ratio (PEG) has grown in popularity.
X1--The Return on Total Capital X2--The Price Earnings Growth Ratio X3--Long Term Debt to Total Capital X4--Operating Leverage-Unlevered Beta X5--The Value Line Safety Rating X6--The Value Line Timeliness Rating X7--Earnings Predictability
Thus, according to Table 2, the greater the following variables: the price earnings growth ratio, the Value Line rankings for safety, timeliness, and the level of operating leverage (risk), the more likely the firm would achieve a high level of stock price stability.
Some multicollinearity may exist between the variables, because return and the growth factor in the price earnings growth ratio may be a partial function of risk and leverage, and the numerator in the price earnings growth ratio may be a partial function of growth, return and risk.