Valuation: P/E, PEG & Price-to-Sales
How expensive or cheap a stock appears relative to its profit and sales.
In Simple Words
Valuation metrics compare a company's stock price to what it earns or sells. A low ratio can mean 'cheap' and a high ratio can mean 'expensive' — but fast-growing companies often deserve higher ratios.
Why It Matters
Price is what you pay; value is what you get. Valuation helps you avoid overpaying for popularity.
Key Terms
Share price divided by earnings per share. How many years of profit you pay for.
P/E based on expected future earnings instead of past earnings.
P/E divided by earnings growth rate. Helps compare companies growing at different speeds.
Market cap divided by revenue. Useful when profits are negative.
How to Use It in Warifin
- 1Open a company page in Warifin Intelligence.
- 2Find the valuation section (P/E, forward P/E, PEG).
- 3Compare the ratios to the sector average where shown.
How to Interpret It
If a company has P/E 20 and growth 20%, its PEG is about 1 — often considered balanced. A PEG well above 2 may signal high expectations baked into the price.
Beginner Mistakes
- Assuming a low P/E is always a bargain (it may signal trouble).
- Ignoring growth when comparing P/E ratios.
Try It Yourself
Pick a company, note its P/E and PEG, and write one sentence on whether it looks expensive, cheap, or fairly valued — and why.
Key Takeaway
Valuation compares price to fundamentals — but growth and context decide whether a ratio is fair.
Open the real tool to practice.
Knowledge Check
Choose an answer, then check.1. P/E ratio is price divided by…
2. PEG helps compare companies with different…
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Stock Research Fundamentals
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