Price to Earnings Growth Ratio (PEG)
Calculate the price earnings to growth (PEG) ratio, a valuation metric that measures the ratio of the price-to-earnings ratio to earnings growth rate.
The price-to-earnings growth (PEG) ratio provides a more comprehensive valuation measure compared to the P/E ratio alone. It takes into account a company’s earnings growth rate, allowing investors to assess whether a stock is overvalued or undervalued relative to its growth prospects.
The formula is as follows:
\[\text{Price Earnings to Growth Ratio} (\text{PEG}) = \text{Price Earnings Ratio} (P / E) / \text{Growth Rate}\]Also known as: PEG ratio, price earnings growth.
Price to Earnings Growth Ratio (PEG) in Python
get_price_to_earnings_growth_ratio is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_price_to_earnings_growth_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
peg_ratio = toolkit.ratios.get_price_to_earnings_growth_ratio()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | 0.443 | 2.3908 | 92.3141 | -50.1989 | 1.6036 |
| TSLA | 0.322 | 0.2797 | 3.0479 | -3.7616 | -8.8524 |
Parameters
get_price_to_earnings_growth_ratio accepts the following parameters:
- use_ebitda_growth_rate (bool, optional): Whether to use EBITDA growth rate for the calculation. Defaults to False.
- include_dividends (bool, optional): Whether to include dividends in the calculation. Defaults to False.
- diluted (bool, optional): Whether to use diluted shares in the calculation. Defaults to True.
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.