One of the most common mistakes when starting to invest is judging whether a stock is "expensive" or "cheap" by looking only at its dollar price. Price alone tells you nothing: it depends on how many shares are outstanding. To compare stocks meaningfully, you need ratios that relate price to something about the business.
P/E (Price to Earnings)
P/E divides the stock's price by earnings per share. In other words: how much the market is paying for each dollar of profit the company generates. A P/E of 30 means that, at the current pace of earnings, it would take 30 years to "recoup" that price from reported profits alone (a simplification, but useful for understanding the logic).
A high P/E isn't necessarily bad: it can reflect that the market expects strong future earnings growth. A low P/E isn't automatically an opportunity either: it can reflect that the market expects earnings to decline, or that there's a risk already priced in.
PEG: P/E adjusted for growth
PEG divides P/E by the expected earnings growth rate. It's an attempt to answer the question P/E alone can't: "is this price reasonable given how much the company is expected to grow?" As a general reference (not a fixed rule): a PEG below 1 can suggest the price is cheap relative to its expected growth; above 2, that it's expensive even accounting for that growth.
Why DSMarketLearning shows them together, with a gauge
Neither P/E nor PEG has a universal "correct number" — they vary a lot by sector (a utility and a software company almost never share the same "normal" P/E). That's why each stock's page shows them with a visual gauge and a plain-language interpretation, as a quick reference rather than an absolute verdict.
This article is educational content, not personalized investment advice. Before making decisions, read our disclaimer.