PEG Ratio by Industry 2025
The PEG ratio is one of the most valuable metrics in an investor’s analytical toolkit, offering deeper insight than traditional valuation measures. While the widely-used Price/Earnings (P/E) ratio helps assess a company’s current valuation relative to its earnings, the PEG ratio takes this analysis a crucial step further by incorporating the critical growth element.
This article comprehensively analyzes the Price/Earnings-to-Growth (PEG) ratio across various industries for the year 2025.
What is the PEG Ratio?
The PEG ratio (Price/Earnings-to-Growth ratio) is a stock valuation metric that helps investors assess the relationship between a company’s price-to-earnings (P/E) ratio and its expected earnings growth rate. It builds upon the P/E ratio by factoring in future growth, offering a more nuanced perspective on valuation.
PEG = P/E Ratio / Expected Earnings Growth Rate
The PEG ratio is widely used by value investors to identify stocks that are undervalued relative to their growth potential.
PEG Ratio by Industry
Here is a summary of PEG ratios by Industry. This data highlights how growth expectations and valuations vary significantly across sectors, making the PEG ratio useful for industry comparisons and investment decisions.
| Industry | AVERAGE of PEG TTM |
|---|---|
| Advertising/Marketing services | 0.40 |
| Aerospace & defense | 2.12 |
| Agricultural commodities/Milling | 2.52 |
| Air freight/Couriers | 1.30 |
| Airlines | 2.05 |
| Alternative power generation | 1.75 |
| Aluminum | 0.22 |
| Apparel/Footwear | 2.46 |
| Apparel/Footwear retail | 3.32 |
| Auto parts: OEM | 0.88 |
| Automotive aftermarket | 7.50 |
| Beverages: alcoholic | 1.77 |
| Beverages: non-alcoholic | 0.95 |
| Biotechnology | 11.39 |
| Broadcasting | 0.12 |
| Building products | 14.44 |
| Cable/Satellite TV | 0.68 |
| Casinos/Gaming | 1.01 |
| Catalog/Specialty distribution | 0.61 |
| Chemicals: major diversified | 0.34 |
| Chemicals: specialty | 1.48 |
| Coal | 0.34 |
| Commercial printing/Forms | 0.71 |
| Computer peripherals | 1.17 |
| Computer processing hardware | 0.41 |
| Construction materials | 0.89 |
| Consumer sundries | 0.81 |
| Containers/Packaging | 3.41 |
| Contract drilling | 0.40 |
| Data processing services | 1.43 |
| Department stores | 0.96 |
| Discount stores | 1.08 |
| Drugstore chains | 4.93 |
| Electric utilities | 11.02 |
| Electrical products | 1.55 |
| Electronic components | 0.90 |
| Electronic equipment/Instruments | 1.43 |
| Electronic production equipment | 1.87 |
| Electronics distributors | 0.86 |
| Electronics/Appliances | 1.68 |
| Engineering & construction | 2.16 |
| Environmental services | 1.53 |
| Finance/Rental/Leasing | 4.04 |
| Financial conglomerates | 4.79 |
| Financial publishing/Services | 2.45 |
| Food distributors | 5.72 |
| Food retail | 1.61 |
| Food: major diversified | 4.57 |
| Food: meat/fish/dairy | 3.22 |
| Food: specialty/candy | 4.03 |
| Forest products | 8.85 |
| Gas distributors | 9.26 |
| Grand Total | 3.45 |
| Home furnishings | 1.45 |
| Home improvement chains | 6.85 |
| Homebuilding | 1.37 |
| Hospital/Nursing management | 0.95 |
| Hotels/Resorts/Cruise lines | 2.13 |
| Household/Personal care | 13.61 |
| Industrial conglomerates | 4.09 |
| Industrial machinery | 3.18 |
| Industrial specialties | 2.02 |
| Information technology services | 2.49 |
| Insurance brokers/Services | 3.99 |
| Integrated oil | 1.67 |
| Internet retail | 0.91 |
| Internet software/Services | 2.33 |
| Investment banks/Brokers | 1.90 |
| Investment managers | 0.72 |
| Investment trusts/Mutual funds | 1.62 |
| Life/Health insurance | 0.43 |
| Major banks | 2.64 |
| Major telecommunications | 3.76 |
| Managed health care | 3.08 |
| Marine shipping | 0.83 |
| Medical distributors | 0.40 |
| Medical specialties | 4.19 |
| Medical/Nursing services | 13.18 |
| Metal fabrication | 59.85 |
| Miscellaneous | 0.64 |
| Miscellaneous commercial services | 1.92 |
| Miscellaneous manufacturing | 1.43 |
| Motor vehicles | 1.62 |
| Movies/Entertainment | 1.01 |
| Multi-line insurance | 1.04 |
| Office equipment/Supplies | 0.29 |
| Oil & gas pipelines | 10.07 |
| Oil & gas production | 5.94 |
| Oil refining/Marketing | 2.23 |
| Oilfield services/Equipment | 0.45 |
| Other consumer services | 8.66 |
| Other consumer specialties | 0.19 |
| Other metals/Minerals | 2.60 |
| Other transportation | 0.66 |
| Packaged software | 15.81 |
| Personnel services | 1.55 |
| Pharmaceuticals: generic | 0.19 |
| Pharmaceuticals: major | 1.98 |
| Pharmaceuticals: other | 0.89 |
| Precious metals | 0.32 |
| Property/Casualty insurance | 0.76 |
| Publishing: books/magazines | 1.10 |
| Publishing: newspapers | 0.55 |
| Pulp & paper | 1.13 |
| Railroads | 1.45 |
| Real estate development | 0.74 |
| Real estate investment trusts | 1.58 |
| Recreational products | 0.49 |
| Regional banks | 2.94 |
| Restaurants | 1.93 |
| Savings banks | 2.41 |
| Semiconductors | 0.55 |
| Services to the health industry | 4.56 |
| Specialty insurance | 0.49 |
| Specialty stores | 3.90 |
| Specialty telecommunications | 1.41 |
| Steel | 0.37 |
| Telecommunications equipment | 1.70 |
| Textiles | 1.87 |
| Tobacco | 1.63 |
| Tools & hardware | 1.25 |
| Trucking | 3.79 |
| Trucks/Construction/Farm machinery | 1.49 |
| Water utilities | 0.92 |
| Wholesale distributors | 10.48 |
| Wireless telecommunications | 2.36 |
Data sourced from tradingview.com on March 25, 2025
Market-Wide Observations of PEG Ratio
The market shows extraordinary valuation gaps between sectors, with PEG ratios ranging from 0.12 (Broadcasting) to 59.85 (Metal fabrication). This suggests potential market inefficiencies and mispricing that investors could exploit. Many traditional sectors show remarkably low PEG ratios, including metals, basic materials, and traditional media. This could indicate excessive pessimism about their growth prospects or a significant value opportunity.
The massive gap between Generic Pharmaceuticals (0.19) and Biotechnology (11.39) reflects different growth expectations and risk profiles but may overstate the actual difference in future performance. The technology sector shows a notable split, with hardware (semiconductors, computer processing) trading at low PEGs while software trades at premium valuations.
This divergence suggests investors may overestimate the growth differential between hardware and software.
Despite their typically slow growth, utilities show surprisingly high PEG ratios (Electric utilities at 11.02), suggesting investors pay a significant premium for perceived safety and dividend yield.
Notable Sector Trends
Mixed valuations with Semiconductors (0.55) appear undervalued, while Packaged software (15.81) looks extremely overvalued—a wide range from undervalued Generic Pharmaceuticals (0.19) to highly valued Biotechnology (11.39). Traditional energy like Coal (0.34) and Oilfield services (0.45) have low PEGs, while Alternative power (1.75) and Oil & gas pipelines (10.07) have higher valuations.
Investment managers (0.72) and Life/Health insurance (0.43) show low PEG ratios compared to Financial conglomerates (4.79). There is a significant variation, with Discount stores (1.08) looking reasonably valued while Home improvement chains (6.85) appear expensive.
Industry Comparison Analysis of PEG Ratio
Low PEG Ratios (<1): Industries like steel, Auto Parts, and chemicals (Diversified) indicate potential undervaluation relative to growth.
High PEG Ratios (>3): Industries such as metal fabrication, Computers/Peripherals, and building products suggest higher valuations relative to expected growth.
PEG Ratio: Weighing the Pros and Cons for Investors
The PEG ratio offers several advantages over simpler valuation metrics:
- The PEG ratio provides a more forward-looking assessment than the traditional P/E ratio.
- It enables meaningful comparisons between companies with different growth rates or across various industries with different growth characteristics.
- The PEG ratio helps identify stocks that might be reasonably priced despite having seemingly high P/E ratios due to their superior growth prospects.
- It can highlight situations where investors might be paying too much for anticipated growth that may not materialize.
Despite its utility, the PEG ratio has important limitations:
- The ratio relies on forecasted growth rates, which are inherently uncertain and subject to change.
- Different industries typically have different baseline PEG ratios due to their growth profiles and business models.
- The ratio’s usefulness depends on the accuracy of growth projections over the specified timeframe.
- When companies have negative or zero projected growth, the ratio becomes meaningless or unusable.
Elevate Your Portfolio with Intelligent Insights
The PEG ratio analysis reveals significant market inefficiencies across industries; these disparities suggest a potential market dynamics shift favoring value-conscious investors. To capitalize on these insights, investors should consider rebalancing portfolios to capture undervalued sectors while reducing exposure to overextended areas.
Eqvista’s comprehensive equity management platform can help you implement these strategies efficiently, providing the tools to track, analyze, and optimize your investments across these varying industry valuations. Contact Eqvista today to transform these market insights into actionable investment decisions backed by professional-grade portfolio analytics and management solutions.
