PEG=PE/G, where PE= share price/earnings per share = price-earnings ratio, and G= revenue growth rate, which refers to the compound growth rate of the company's net profit in the next 3-5 years.

The linked valuation method is Peter.

Used as a method to evaluate the value of growing companies.

PEG value can usually be divided into four grades: PEG《0.5 》, which is considered to be relatively underestimated; PEG=0.5- 1, which is relatively reasonable; PEG= 1-2, indicating that the value is relatively overvalued; PEG》2 is a high-risk area.

In view of the rapid economic development and A-share environment in China, the reasonable valuation of A-share high-growth companies can be considered as PEG= 1, that is, PEG = 1 is a reasonable valuation when the P/E ratio of the company is the same as the compound growth rate in the next 3-5 years.

For example, the price-earnings ratio is 20 times for Company A, 30 times for Company B and 50 times for Company C; The compound growth rate in the next three years: A company 10%, B company 30%, C company100%; Analysis: From the perspective of P/E ratio, Company A has a minimum of 20 times and Company C has a maximum of 50 times. Is the valuation of company A lower than that of company C? The result of PEG valuation method is that PEG=20/ 10=2 of Company A, from which we can see that PEG= 1 of Company B is reasonable in valuation, and PEG=2 of Company A is an overestimated and high-risk area.