The PE metric...Honestly... one could debate the use or importance of the PE metric until the cows come home. Having said that, it is a quick and easy evaluation metric to calculate and compare IVN and its peers. Btw, the Price Earnings of a stock may be determined using the following two formulas, wth the first seemingly the one most often used:
1. PE = Stock Price/Earnings Per Share
2. PE = Market Cap/Net Income
While I wouldn't consider the PE to be the "be-all...end-all" metric, the ratio is definitely useful to get a quick idea of IVN's valuation, but it is only one piece of a complicated puzzle, for sure. I think most investors would agree that no single metric can tell you whether a stock is a good investment or not. Personally, I would never invest in a stock based on the PE ratio alone, simply because I feel that that number cannot tell me if the investment is really a good idea.
One of my preferential metrics to use is free-cash-flow for valuation. While FCF can be manipulated, it's definitely more difficult to fake cash. Over the long term, a well-run company's FCF should be in approximation to its earnings.
In any case, the price-to-earnings (P/E) ratio measures a company's market price compared to its earnings per share and is a pretty good indciator of what the market is willing to pay today for a stock based on a company's past or future earnings.
And remember... ultimately, it is the market, based on supply and demand, that will dictate IVN's share price.