I have to disagree with that statement.
PEs are forward multiples based on earnings growth.
Earnings growth are 1 evaluation criteria, but there are many, many more criteria used for stock evaluation. It depends to a large degree upon the evaluator as to what they use. Also, how does the market look at the growth factor, and the special sectors within the overall sector being evaluated.
For example, Micron is cast as a commodity stock which has a lot of connotations as to how they are evaluated and wind up with low PE values compared to growth stocks such as NVDA. Here is a "slice" of the SOXM earnings table from this past weekend with a few stocks listed picked at random.
Note that MU has the highest percent gain in earnings Year to Year, yet the lowest PE by far. This is greatly determined by the fact that it is classified as a commodity stock. NVDA on the other hand shows an estimated earnings gain of 9.4%, and has a Next Year PE of 45.1%. Keep in mind, with a Jan FY, earnings are expected to be 3.97 for all of CY 2018, 15 months from now. If it is expected to have, as a growth stock, a large earnings growth, where is the evidence in the earnings estimate going forward?
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