peg


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Pegging

1. The practice of fixing the exchange rate of a currency to the value of another currency. Most countries that peg their currencies do so to the U.S. dollar, though some peg to currency baskets. See also: Fixed exchange rate.

2. The act of buying a security in a large quantity to drive up the price. Writers of put options (and holders of short positions) practice pegging when the expiration date is approaching and it appears that the option will be exercised such that it puts the writer at a disadvantage. The idea behind pegging is to cause the price to rise so the option is not exercised and the writer can profit from the premium.

Price/Earnings-to-Growth Ratio

A ratio of a stock's valuation, that is, how expensive a stock is relative to its earnings and expected growth. It is calculated as:

PEG = Price/Earnings/Annual Earnings Growth per Share

A lower ratio indicates a less expensive stock with higher earnings and growth, while a higher ratio indicates the opposite. According to Peter Lynch, who popularized the ratio, a fairly priced stock has a ratio of 1.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

peg

1. To fix the price of a new security issue during the issuance period through buying and selling it in the open market in order to ensure that the price in the secondary market will not fall below the offering price. Also called holding the market, price stabilization, stabilize. See also stabilization period.
2. To fix the rate at which foreign currencies exchange with one another.
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.

Price/earnings-to-growth ratio (PEG).

To find a stock's PEG ratio, you divide the stock's price-to-earnings ratio (P/E) by its projected annual earnings per share (EPS) growth. The result is a rule-of-thumb assessment of whether the stock is overvalued or undervalued.

In brief, if a stock has a PEG ratio of 1, you conclude that investors are paying what the stock is worth based on its P/E and growth potential. If it is higher than 1 -- say 1.55 -- you conclude that investors are paying more than the growth projection justifies. If it is less than 1, you conclude that the stock may be poised to appreciate in value and so a wise purchase.

However, a PEG ratio, by itself, does not provide an adequate basis for an investment decision, any more than a P/E does, because it doesn't take company fundamentals into account. For example, an under-priced stock may be a good buy, but it may also be the sign of a company in poor financial shape or an industry in trouble.

The potentially greater problem is that growth projections, even when they are the consensus finds of professional analysts, are just estimates. That is especially true of estimates that look out five or more years, since there is no way to anticipate the shifting marketplace with real precision. Yet projections based on a single-year's results are notoriously inaccurate.

In short, a PEG ration can be a valuable addition to an investor's toolkit, provided you understand the assumptions on which its components and results are based.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Gary Morris poled corn and pellet to the far bank and in the margins of peg 18 for second with 142-4-0 of carp to 7lb, ahead of Eric Bancroft's 139-5-0 from peg 16.
The match was fished on the Shropshire Union Canal at Norbury Junction in Stafford with Wolverhampton-rod Turner (Bag'em/Maver Midlands) topping the charts from peg 112 with 13-10-0 of perch to 2lb, roach, hybrids and skimmers.
Sqware Peg was attracted to Simplus, a quote-to-cash leader, because of its rapid growth.
To our knowledge, there is no report about that PEG was used for extraction of CGA from leaves of L.
While the PEG ratio may seem to be a useful tool in identifying relatively undervalued stocks particularly in a bull market where P/E ratios tend to be inflated, there are fundamental limitations to this concept that lessen its reliability.
The darker regions correspond to the saturated AB, whereas the lighter regions marked by arrows indicate the excess PEG, as shown in Figure 3(a).
El Sayed and Morsi [25] prepared PVA/ PEG nanocomposites based on a hematite ([alpha]-[Fe.sub.2][O.sub.3]) nanofiller and reported improvement in optical and dielectric properties of the prepared nanocomposites.
The longitudinal relaxation time (T1, ms) and transverse relaxation time (T2, ms) of the synthesized PEG contrast agent solutions were characterized by NMR measurements, and the T1-weight images were obtained by 1.5 T MRI.
The eligibility criteria for inclusion into this network analyses are studies involving adults with HBeAg-positive CHB in randomized, controlled trials (RCTs) that investigated a combination of the following therapies (such as monotherapy, combination, add-on, or switching): placebo (PLA), lamivudine (LAM), adefovir (ADV), entecavir (ETV), lamivudine (LdT), tenofovir (TDF), and PEG IFN.
PEG provides loans for solar home systems and other useful assets to off-grid households in West Africa.
Setting the 'gold safety standard' in pegboard positioning, Innovative Medical Products' Expand-A-Peg Locking Peg eliminates intra-operative peg motion and disengagement, keeping patients securely in place for the entire surgical procedure.
The SVRs for genotype 1 were significantly lower than those for non-genotype 1 irrespective of the stage and the PEG formulation used.