Why is PEG ratio better than PE ratio for long term investing? Here are 5 reasons

While investing for a longer period of time, making decisions on the basis of a single financial matrix could be harmful to the financial objective for which you might be investing. How is it different from the price earning ratio Here are the five ways PEG ratio has an advantage over PE ratio PEG ratio evaluates growth The PE ratio measures the price of a stock relative to its earnings, while the PEG ratio takes into account the company's growth rate. The PEG ratio helps you to account for the company's future growth potential and gives a more complete picture of the stock's valuation. Complete comparison of stocks Because the PEG ratio takes into account the company's growth rate, it is a more reliable measure for comparing stocks in different industries. By taking into account the company's growth rate, the PEG ratio helps you to identify undervalued stocks, compare stocks in different industries, and reduce their risk exposure.