Financial modelling terms explained

Price/Book/Growth (PEG)

The price-to-book ratio, also known as P/B or P/B ratio, is a financial ratio used to compare a company's share price to its book value. The price-to-book ratio is calculated by dividing a company's share price by its book value per share.

What Is PEG?

PEG is a measure of a company's price to earnings ratio divided by its earnings growth rate. It is used to determine whether a company is overpriced or underpriced. A PEG ratio of 1 means that the company is trading at its fair value. A PEG ratio of less than 1 means that the company is underpriced and a PEG ratio of more than 1 means that the company is overpriced.

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