P/E and PEG: what the metrics mean
Price to earnings is the best-known way to judge whether a stock is expensive, plus its adjustment for growth.
P/E Non-GAAP (TTM) — price to adjusted earnings
How many years of earnings the stock costs, counting earnings the way management presents them: without write-offs, stock-based compensation and other one-offs. Analyst consensus is tied to these earnings, which is why companies are most often compared on this number.
In detail, with an example →P/E Non-GAAP (FWD) — the same, one year ahead
Price divided by the adjusted earnings analysts expect next year. Lower than the TTM version for a growing company and higher for one expected to shrink; the gap between the two says on its own which way the market expects earnings to move.
P/E GAAP (TTM) — price to reported earnings
The same ratio, but earnings are taken from the financial statements as they are, with every one-off loss and gain. Usually higher than Non-GAAP and fairer to the shareholder: write-offs and stock pay are real costs, just inconvenient ones.
In detail, with an example →P/E GAAP (FWD) — reported earnings, estimate
Price to GAAP earnings expected in the next fiscal year. Read together with TTM: the gap shows whether the price already assumes earnings growth or a decline.
PEG GAAP (TTM) — P/E adjusted for growth
P/E divided by the expected earnings growth rate. The idea is simple: a business expensive on P/E is not expensive if its earnings grow fast. Around 1 the growth is priced fairly; well below — the market barely pays for growth; well above — you are paying in advance.
In detail, with an example →PEG Non-GAAP (FWD) — the same, on estimates
Forward P/E on adjusted earnings divided by their expected growth rate. Sensitive to the denominator: when expected growth is close to zero the number blows up and comparing it is meaningless.
In detail, with an example →