PEG Ratio

The PEG ratio divides a company’s price-to-earnings ratio by its earnings growth rate, putting a fast grower and a slow grower on more equal footing — a high P/E can be reasonable if earnings are climbing quickly. The rule of thumb, popularized by Peter Lynch, is that a PEG around 1 suggests a fair price. Market Lens applies the same intuition in its fair-P/E estimate (setting a fair multiple near the growth rate) but caps it between 8× and 20× — a deliberately conservative choice of its own, not a rule from Lynch.