Surely not - P/E ratio is a guess at future profits factored in now. If a company is demonstrating real profits now and so has a viable business model, it will be easier to guess (project?) future profit and so P/E ratio will lower
I suspect this only works for P/E ratios above one order of magnitude - when dealing with companies that obey laws of gravity other factors come in to play (I mean seriously 900x earnings. That's insane).
So you're agreeing with me. I'm arguing it has minimal correlation. If high P/E = future profits, the model is useful. Low P/E (if they are making a healthy profit) = the model is useful.
It's the edge case of low P/E and low profits that indicates a non-valuable biz model.
I suspect this only works for P/E ratios above one order of magnitude - when dealing with companies that obey laws of gravity other factors come in to play (I mean seriously 900x earnings. That's insane).