Comment by jandrewrogers

If a company has strong growth in real dollars or inflation is high then a higher P/E is approximately valuation neutral. P/E ratios don't exist in a vacuum and low isn't always better. The price-to-sales ratio is often more indicative of whether something is overvalued than P/E in high-growth cases because earnings are used to finance growth.

P/E ratios tend to be small only if revenue growth in nominal dollars is flat, which tacitly treats the stock more like a bond.