The price to earnings ratio is frequently used in the investing world.
It essentially tells you how expensive a stock is. For example, lets say Walmart's stock is trading at a p/e multiple of 10. This simply means that for every $1 Walmart earns you are willing to pay $10.
Stocks like Netflix and Amazon have extremely high p/e multiples because investors are willing to pay more for a company that is growing.
Stocks like AT&T and Walmart have low p/e multiples because investors are expecting steady profits.
