The price/earnings to growth ratio, or PEG ratio, is a stock valuation measure that investors and analysts can use to get a broad assessment of a company's performance and evaluate investment risk. In theory, a PEG ratio value of 1 represents a perfect correlation between the company's market value and its projected earnings growth. PEG ratios higher than 1 are generally considered unfavorable, suggesting a stock is overvalued. Conversely, ratios lower than 1 are considered better, indicating a stock is undervalued.
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