Forward P/E vs PEG Ratio

FeatureForward P/E RatioPEG Ratio
What it measuresPrice relative to next year's earnings.Price relative to earnings and growth rate.
The FormulaStock Price ÷ Expected 12-Month EPSForward P/E ÷ Expected Annual Growth Rate
Best used forComparing mature companies in the same sector.Comparing high-growth tech or momentum stocks.
The BlindspotIgnores whether a company is growing at 5% or 50%.Growth estimates can be highly inaccurate.
Good Value BenchmarkVaries widely by industry.A PEG ratio under 1.0 is traditionally undervalued.