The price-to-earnings growth ratio, or PEG ratio, is the market’s valuation of a company relative to its earnings prospects. A PEG ratio of 1 indicates that the stock’s price is in line with growth expectations. A PEG ratio less than 1 suggests that the stock of the company is undervalued (typical of value stocks), whereas a PEG ratio greater than 1 suggests the stock is overvalued (typical of growth stocks). The accompanying table shows a portion of PEG ratios of companies listed on the Dow Jones Industrial Average; the entire data set, labeled DOW_PEG, can be found on the text website.
Company ..... PEG Ratio
3M (MMM) .... 1.4
Alcoa (AA) ..... 0.9
: :
Walt Disney (DIS) ... 1.2

Construct a stem-and-leaf diagram on the PEG ratio. Interpret your findings.

  • CreatedJanuary 28, 2015
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