P/E ratio - This is the current price of the stock divided by the earnings for the year.  If your stock has a P/E ratio of 20, that means that with its current earnings, it will take twenty years for the company to earn back what you are paying for it (at its current stock price).

When there is an increase in the company's projected growth rate, there will be an increase in their P/E ratio.

The more the market likes the stock the higher the P/E ratio.

Doesn’t matter when you get into the market, low P/E’s will still out perform high P/E’s.

Low P/E’s also have lower beta’s (lower specific risk).

Beta - Compares the market’s volatility with the market volatility of one stock.  A high beta means that the stock has a lot of systematic risk.  (If a stock price is more volatile than the market the reason must be because it has risk specifically related to that company).  If a stock moves exactly with the market (beta of 1.00), it only has risk associated with the market in general.
The goal of diversification of stocks is to reduce the beta down to 1.00.  Then you only need to worry about the general economic conditions, interest rates, presidential elections, profit taking, and all the other general factors that influence the prices of the overall market.  (It is possible to diversify these stock market conditions away by investing in not only U.S. stocks, but also international stocks, investing in real estate, bonds, precious metals, commodities, etc.  Diversification will be a topic of its own.)

Systematic risk - Market risk - when your stock is influenced by the fluctuations in the market (when the market goes down and your stock goes down as well for no other reason)

Lower P/E’s offer higher returns because good news get’s exaggerated in the market.

Relative P/E ratio = P/E of your stock divided by the P/E of the market

Monday’s Wall Street Journal will show the P/E for the S&P 500 (on the page with DJIA graph).  This is a good indication of the market's P/E.

If a company has no earnings yet, they won't have a P/E so in the newspaper this column will list --- or N/A.

The P/E ratio is used in fundamental analysis.  The computer programs and spreadsheets used to evaluate a feasible range for a stock price almost always include this ratio somewhere in the calculations.   Comparing those earnings with the price of the company should provide you with basic insight on whether a stock is overpriced, underpriced, or a good price.