Forward P/E vs PEG Ratio
| Feature | Forward P/E Ratio | PEG Ratio |
|---|---|---|
| What it measures | Price relative to next year's earnings. | Price relative to earnings and growth rate. |
| The Formula | Stock Price ÷ Expected 12-Month EPS | Forward P/E ÷ Expected Annual Growth Rate |
| Best used for | Comparing mature companies in the same sector. | Comparing high-growth tech or momentum stocks. |
| The Blindspot | Ignores whether a company is growing at 5% or 50%. | Growth estimates can be highly inaccurate. |
| Good Value Benchmark | Varies widely by industry. | A PEG ratio under 1.0 is |
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