What does pe valuation mean?

In some fundamental analysis, it can often be seen that the pe valuation of the stock has been put in place, and there is limited room for further increase in the later period. So what does this mean? What do we think of this passage?

Pe valuation is a ratio, the numerator is P (price, stock or stock price) and the denominator is E (earnings, company income), so it is what we call price-earnings ratio in our daily life. Generally speaking, a company's income is sustainable, so the company's external price should be multiple of the company's income. Therefore, high-growth companies have high pe, while stable companies such as consumption and industry have relatively low pe. When pe is 1, it means that the company's annual profit per share is equal to the stock price.

The simple understanding of pe valuation is that you buy at the current share price, and how many years will it take for the company to operate before you can fully earn back your investment. So the PE of some stocks is 200 times, which means that the company needs to work for 200 years to earn back the capital we invested. And if the pe of some stocks is 10 times, then this means that the company can earn back the capital we invested in as long as 10 years.

However, it should also be noted that the average pe of different industries is different, and the pe of companies and large enterprises in the same industry is generally higher than that of small enterprises in the same industry.