price-earnings/growth ratio (PEG ratio)

A valuation tool that compares a stock's price-earnings ratio with the firm's expected growth in earnings per share. Most advocates of this tool believe choosing a stock with a PEG ratio of less than one will tend to produce above-average returns.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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