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PEG ratio

The PEG ratio is simply the P/E ratio adjusted for the growth of earnings over the time period that the P/E ratio measures. The PEG ratio adjusts the valuation of a company by its growth rate: the theory is that is that what you pay for is a product of the amount of growth you expect. The PEG ratio is the core metric behind Peter Lynch’s Growth At A Reasonable Price (GARP) investment strategy.

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