The P/E ratio compares stock price to earnings per share, showing how much investors pay per pound/dollar of profit. PEG adjusts for growth, making cross-stock comparisons more meaningful.
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Pro Tip
A PEG ratio below 1.0 is often considered undervalued; above 2.0 may indicate overvaluation.
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Did You Know?
The S&P 500 average P/E since 1871 is about 16x. It reached 44x at the dot-com peak in 2000.
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