The price/earnings-to-growth ratio (PEG) divides a company’s price-to-earnings (P/E) ratio by its earnings growth rate. It adds projected growth to a comparison that would otherwise show only how much investors pay for earnings. section 2.4.4
Use PEG as comparative evidence, not as a standalone verdict:
- Compare the result with sector medians and peer companies because P/E levels vary substantially by sector. section 2.4.4
- Distinguish trailing and forward measures; projected earnings can materially change the interpretation. section 2.4.4
- Treat the ratio as a story-dependent metric: a high P/E may look expensive until expected earnings growth is included. section 2.4.4
Table 2.7 A snapshot of NVIDIA’s valuation
|
Sector relative grade
|
NVIDIA
|
Sector median
|
% diff. to sector
|
NVIDIA 5Y avg.
|
% diff. to 5Y avg.
|
|
|---|---|---|---|---|---|---|
|
P/E Non-GAAP (TTM)
|
D
|
44.43
|
22.20
|
100.10
|
63.09
|
29.59
|
|
P/E Non-GAAP (FWD)
|
C-
|
33.14
|
22.64
|
46.38
|
47.38
|
30.05
|
|
P/E GAAP (TTM)
|
C-
|
45.71
|
28.17
|
62.22
|
83.84
|
45.49
|
|
P/E GAAP (FWD)
|
C
|
35.04
|
29.14
|
20.24
|
62.08
|
43.56
|
|
PEG GAAP (TTM)
|
B
|
0.56
|
0.91
|
-38,45
|
—
|
NM
|
|
PEG Non-GAAP (FWD)
|
B+
|
1.15
|
1.73
|
-33.48
|
1.80
|
36.21
|
|
FWD, forward (future financial performance); TTM, trailing 12 months (most recent 12-month period); NM, nonmeaningful value
Data taken from Seeking Alpha on June 8, 2025 (for the latest data, go to
https://mng.bz/Gwm8)
|
Compare NVIDIA’s trailing and forward PEG values with sector medians and five-year averages in the valuation snapshot. section 2.4.4
