Price Earnings Ratio

The market price of a share of a company’s stock divided by the company’s earnings per share is a measure of how cheap or how expensive that company is.

If a company cost $ 75 per share to buy and it earned $5 per share, the price earnings ratio would be $75/$5 or 15. In general a price earnings ratio of 15 indicates that the stock is selling for a fair price, although growth stocks often have higher ratios.

https://accounting.uworld.com/cpa-review/lc/accounting-dictionary/term/price-earnings-ratio/