What the second number teaches
The cheaper sticker can be the dearer stock.
01
A P/E on its own is half a number. It tells you what you pay. It says nothing about what you get for it.
02
PEG staples the halves back together. Price to earnings divided by growth. Near 1 is roughly fair, well under is cheap for the growth, well over is dear.
03
Growth is a forecast, not a receipt. A low PEG resting on a growth number that never shows up is just a high P/E that has not admitted it yet.
Same P/E is not the same price. One number is what you pay. The other is what you pay for. Never read the first without the second.
Learn to read a valuation without getting fooled by one number.
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