Amazon.com (AMZN) PEG Chart

What is the Price to Earnings Growth (PEG) Ratio?

The PEG Ratio chart for Amazon.com (AMZN) compares PE to EPS Growth rates.

Defining fair value is the goal of measuring valuation using the PEG Ratio. The PEG ratio compares the PE Ratio to the EPS Growth rate of a stock to help estimate how many years of earnings growth would be required to reach the current valuation of that stock at a particular time.

Stocks are priced using a forward-looking model, the stock market is a forward-looking indicator, and the PEG ratio helps define how far ahead investors in a particular stock are looking based on its EPS growth rate. Companies growing EPS faster will have a lower PEG ratio if their PE multiples are equivalent, but often companies that are growing faster often have higher PE multiples, and equivalent PEG Ratios.

PEG Ratios help us define valuation for companies growing EPS at various rates by allowing us to compare them with a more equivalent measure. PEG Ratios are considered more valuable than PE Ratios because they account for EPS Growth rates and offer better comps than PE alone.

PEG ratios are attractive because we can use them to compare companies that are growing at different rates and they help us determine fair value across different sectors and industries.

However, PEG ratios can also be somewhat misleading when they incorporate forward looking expectations of analysts that extend beyond the next 12 months. We have determined that forward expectations of analysts are reliable about 12 months out, but beyond that they are far less reliable and therefore PEG ratios that are based on growth expectations far into the future should be taken with a grain of salt.

Preferably, we use trailing 12 month PEG ratios because those allow us to see where PEG ratios have been in the past based on trailing 12 month earnings trends and that gives us an indication of where the best times to buy or sell that stock might be. For example, we might find that the best time to buy a particular stock is when it's trailing 12 month PEG ratio is at an extreme level, and we can identify that using our trailing 12 month PEG ratio chart and then anticipate making an investment when we see the PEG ratio for that stock approach our target range again.

PUBLIC TRADING ACHIVES FOR AMZN. (Real time data for subscribers only)

Amazon.com (AMZN) Trading Report

November 16, 2021

Learn to Evaluate Amazon.com (AMZN) using the Charts

November 06, 2021

Trading Amazon.com AMZN With Integrated Risk Controls

October 27, 2021

Amazon.com AMZN Trading Report

October 18, 2021

Amazon.com AMZN Trading Report

October 07, 2021

Amazon.com AMZN Trading Report

September 27, 2021

Amazon.com (AMZN) Trading Report

September 17, 2021

Amazon.com AMZN Pivot Points

September 07, 2021

Amazon.com AMZN Trading Advice

August 27, 2021

Amazon.com (AMZN) Trading Report

August 17, 2021

Amazon.com (AMZN) Trading Report

August 08, 2021

Trading Amazon.com AMZN With Integrated Risk Controls

July 30, 2021

When Amazon.com (AMZN) Moves Investors should Listen

July 29, 2021

When Amazon.com (AMZN) Moves Investors should Listen

July 19, 2021

Trend Tracker for Amazon.com AMZN

July 09, 2021