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PEG (price-earnings growth factor)

The PEG factor measures the relative cost of earnings growth at the current share price. It is therefore only relevant to those companies which can truly be considered to have growth shares, as defined in REFS definition of 'growth' companies.

The PEG factor is simply the price-earnings ratio (PER) divided by the earnings growth rate (GR), as follows:

PER

------ = PEG FACTOR

GR

The calculation of each element is explained under separate headings (see above for ‘PER’ and below for ‘GR’).

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