alt Hacker NewsI do not know the P/E ratio for your magic box, sorry.
A P/E ratio of 1 indicates that a company's share price is equal to its earnings per share, suggesting that investors are paying $1 for every $1 of earnings.
A P/E ratio of 10 indicates that a company's share price is equal to its earnings per share, suggesting that investors are paying $10 for every $1 of earnings.
Which is the better deal? Neither! The first company could suddenly earn more per share and you will be better off. The second company could loose earnings per share and you will be worse off.
A P/E of 1 means you are paying exactly the earnings per share, which is the fairest and most non speculative price. You are paying what the company is earning.
But why should the fairest price be equal to exactly 12 months of earnings? Why not 1 month, or 100 months?
Is there something special about the length of Earth's orbit that makes it the correct ratio for converting flows to values? If a business were incorporated on Mars, would the fair price be one Earth year of earnings, or one Mars year of earnings? (The latter price would be 88% higher.)