Many investors us a PEG ratio which incorporates a stock’s growth rate into the price to earnings ratio. When you calculate a company’s PEG ratio, you take the PE ratio and divide that number by the company’s current earnings growth rate.

So, for example, if a company has a PE ratio of 15 and its earnings are growing at a 10% rate year over year, then that company’s PEG ratio would be 1.5 (15/10=1.5 PEG). Dr. Pepper Snapple Group’s earnings grew from $2.17 per share in 2009 to $2.44 per share in 2010. So, they had an earnings growth rate of 12.4%, and their PEG ratio is 1.2 (15/12.4=1.2).