Lesson 9: PEG Ratio. P/E divided by growth. A useful sanity check — until you remember the growth number is a guess.
Is the lower P/E really cheaper?
Two stocks, two very different growth rates.
Assessment
Stock A has a price-to-earnings ratio of 30 and is growing profits fast. Stock B has a P/E of 12 and is barely growing. On raw P/E, B looks cheaper — but what is that raw number ignoring?
Is 12 really cheaper than 30? 🤔