---
title: Valuation
description: PEG ratio, Price/Sales, and FCF yield from 8 quarters of SEC filings. Know whether a stock is priced for the growth it's delivering.
---

export const reasons = [
  {
    icon: 'PEG',
    title: 'Growth-adjusted price',
    desc: 'P/E alone tells you how expensive a stock is. PEG tells you whether that price is justified by earnings growth. A $50 P/E on a company growing 50% a year is very different from a $50 P/E on a company growing 5% a year.',
  },
  {
    icon: 'P/S',
    title: 'Useful before profitability',
    desc: 'P/E is undefined for companies with negative earnings. Price/Sales still works — you can evaluate whether the market is pricing in plausible future margins. Watch for revenue growth rate to determine whether the multiple is compressing or expanding.',
  },
  {
    icon: 'FCF',
    title: 'Real cash generation',
    desc: 'FCF yield (Free Cash Flow / Market Cap) shows how much actual cash the business generates relative to its price. A company with strong FCF yield can fund buybacks, dividends, or reinvestment without relying on external capital.',
  },
];

export const pegRows = [
  { cmd: 'PEG < 1',   desc: 'Potentially undervalued. Earnings growth exceeds what the market is pricing in.' },
  { cmd: 'PEG 1 – 2', desc: 'Fairly valued range. Price is roughly commensurate with growth expectations.' },
  { cmd: 'PEG > 2',   desc: 'Growth premium. The market expects growth to accelerate, or the stock is expensive.' },
];

<Section label="Why Valuation Metrics Matter">
  <FeatureList items={reasons} />
</Section>

<Section label="firma show valuation <ticker>">
Fetches 8 quarters of SEC XBRL filings via Finnhub and computes TTM (trailing twelve months)
figures for earnings and revenue. The prior-year period uses quarters 5–8.

<div className="terminal">
  <div className="terminal-line">
    <span className="term-prompt">$</span>
    <span className="term-cmd">firma show valuation TSLA</span>
  </div>
  <pre className="term-pre">{`Valuation — TSLA
Price             $376.30
Market Cap        $1.21T
────────────────────────────────────────
P/E               94.15x
EPS (TTM)         $3.99
EPS (prior year)  $2.27
EPS Growth (YoY)  75.8%
PEG               1.24x
────────────────────────────────────────
Revenue (TTM)     $101.4B
Revenue (prior yr)$96.7B
Revenue Growth    4.9%
Price/Sales       11.94x
────────────────────────────────────────
FCF (TTM)         $3.6B
FCF Yield         0.30%

Fairly valued range (PEG 1-2)
8 quarters used (TTM = Q1–Q4, prior year = Q5–Q8)`}</pre>
</div>

  <Note>
    Requires a Finnhub API key. Set it with <code>firma config set finnhub-key &lt;key&gt;</code>.
    Data is sourced from SEC XBRL filings (10-Q / 10-K) via Finnhub.
    US-listed stocks only.
  </Note>
</Section>

<Section label="Reading PEG">
PEG = P/E ÷ EPS Growth Rate (YoY). A PEG of 1 means the market is pricing in exactly the growth
the company is delivering. Below 1 suggests the stock may be undervalued relative to its growth.
Above 2 implies the market expects significant future acceleration — or the stock is simply expensive.

  <CommandTable rows={pegRows} />

  <Note>
    PEG is most meaningful when EPS growth is positive and stable. For companies with negative or
    highly volatile earnings, P/S and FCF yield are more reliable anchors.
    Firma displays a plain-language verdict (e.g., "Fairly valued range (PEG 1-2)") alongside the raw numbers.
  </Note>
</Section>
