If you need earnings per share (eps), earnings growth and peg ratio and you already have total earnings, number of shares outstanding, price per share, retention rate and return on equity (roe), this calculator does the substitution for you. It suits a quick check, a homework answer you want to confirm, or any figure you need to sanity test.
What Is the PEG Ratio Calculator?
The peg ratio calculator takes total earnings, number of shares outstanding, price per share, retention rate and return on equity (roe) and turns them into earnings per share (eps), earnings growth and peg ratio.
It is the kind of calculation you would otherwise do on the back of an envelope: mechanical, repeatable and easy to get subtly wrong without noticing.
How the PEG Ratio Figure Is Built
Each result is calculated from the ones before it, so the working is fully visible. That matters when the answer is going to be quoted to somebody else and you need to be able to explain where it came from.
The figures are exactly as good as the assumptions underneath them. Check the rates, the periods and the tax treatment before you rely on the result.
Reading the Result Sensibly
A small change in an input can move the result by much more than you would expect, particularly where the calculation divides by one of the figures you supplied. That is worth understanding before you rely on a figure.
For anything that will be committed to, write the inputs down beside the result. A number you can reproduce is worth far more than one you cannot explain.
A Worked Example
Working through an example, with total earnings set to 10, number of shares outstanding set to 5, price per share set to 2, the calculator returns earnings growth of 1,000, and earnings per share (eps) of 2, and pe ratio of 1. Substitute your own figures and the same steps produce the same kind of answer.
Frequently Asked Questions
What do I need to work out earnings per share (eps)?
Enter total earnings, number of shares outstanding, price per share, retention rate and return on equity (roe). The calculator then works through the relationship and reports earnings per share (eps), earnings growth and peg ratio.
What does the peg ratio actually calculate?
It takes total earnings, number of shares outstanding, price per share, retention rate and return on equity (roe) and converts them into earnings per share (eps), earnings growth and peg ratio using the standard relationship for this problem. Each step is applied in turn, so every output is traceable back to the numbers you typed in.
How should I enter total earnings?
Use the value you actually have, in the unit shown next to the field. Enter every value in the same unit system. The calculator assumes the figures you supply are consistent, so it cannot correct a mistake that happens before the calculation starts.
Can I use this for a quick estimate as well as a precise answer?
Yes. The calculator is built for quick checks, so round your inputs to a sensible number of significant figures and the result will be just as useful. If you need more precision, keep the same method and add digits to the inputs rather than adjusting the method itself.
Do I have to fill in every field?
Only the fields a particular result depends on. If you leave one blank, the results that need it simply show a note instead of a number, and everything else still works.