The P/E ratio divides the share price by earnings per share. A P/E of 15 means you're paying £15 for every £1 of a year's profit, which is why it's also called an earnings multiple. The app shows the trailing version, built on the last twelve months of reported earnings. A forward P/E uses next year's forecast earnings instead, so it's only as good as the forecast.
It works for comparing similar businesses — two supermarkets, two banks. It misleads between different ones: a fast-growing software company and a slow-growing utility deserve different multiples, and a P/E says nothing about debt, cash or quality. It also breaks at the edges. Earnings close to zero make it enormous, a loss makes it meaningless, and a one-off gain can make a company look cheap for a year.
£15 for every £1 of this year's profit. Cheap or dear depends on what you compare it with.
Educational content only. It is not personal financial advice.