2. Adjusted multiples: In the PEG ratio, the PE ratio is divided by expected growth in the future, to estimate a growth-adjusted version of the PE ratio. In effect, a firm that trades at a lower PEG ratio is cheaper than one that trades at a higher PEG ratio. Under Armour’s PEG ratio of just about 1 (20.71/20.90) is higher than the sector average of 0.65 (9.70/15), suggesting that it is overvalued.
