PEG stands for Price / Earning Growth, this PEG Ratio was not created by Jim Slater, but was created by Mario Farina in his book A Beginner's Guide To Successful Investing In The Stock Market.
PEG Ratio is a simple valuation method for determining the cheap or expensive value of a stock using the ratio of share price to earnings per share (PE) with its profit growth. In general, the P / E ratio is higher for companies with higher growth rates.
The formula for PEG ratio
PEG = PE Ratio / EPS Growth
Where if the result is less than 1 it means undervalued, because the growth value is higher than the stock price, if it is equal to 1 it means that it is fair because the growth value is the same as the price, if the PEG value is more than one it means that the
PEG ratio is overpriced. low growth, as in long-established companies that usually have a low growth rate but provide relatively large and stable dividend income
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