Why choose between growth and value when you can have both. Investors love high growth stocks with a reasonable valuation. The PEG Ratio, defined as the stock's P/E ratio divided by the growth rate of its company's earnings, is a good empirical tool for identifying undervalued growth stocks.
A popular rule of thumb is to consider a stock underpriced if its PEG falls much below 1, and overpriced if the PEG is much greater than 1.

PEG Analysis for China Internet Stocks

The9 (Nasdaq: NCTY) reported intriguing earnings last week. Although the company’s Q1 revenue was unchanged from last quarter’s revenues, missing expectations of a single digit increase, the company posted earnings of $0.30, beating consensus estimates by 2 cents.

Analysis of The9’s Q1 Earnings Results

The Q1 earnings results are intriguing for the following reasons:

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