The Price to Earnings ratio is a way of comparing stocks, because the 'list price' of a stock is irrelevant. In general a company with a low P/E is less volatile, and often "safer." A high P/E company can be more volatile but will often have much higher growth prospects, which means better expect future returns.

The P/E is determined by dividing the price of the stock by the expect future earnings per share. As expected future earnings expectations (the E) increase or decrease the P/E goes up or down. The P/E also goes up or down as more people buy or sell a desirable or undesirable stock, affected the P in P/E.

For example, utilities, industrials, or staples tend to trade with low P/E ratios, they are not growing much, they are not shrinking, they are steady companies that pay a dividend, but probably will not gain much in terms of stock price. Examples of this would be companies like 3M, Coca-Cola, Verizon. (The current stock price has gone up recently due to a flight to safety from current market turmoil, this change in the P has increase the P/E on a lot of these "safe" companies.)

Of the flip side you have high growth companies, where investors want to pay more with the expectation of stock appreciation because the company is growing quickly. This results in a higher P/E. Examples would be Amazon, Netflix, and Tesla. A higher P/E also means that any weakness or hint of declining growth can obliterate the stock.

Recent examples of this would be Chipotle; or LinkedIn, which lost 40% of it's value in one day, as investors readjusted their growth outlook for the stock and thus the P/E. (Higher P/E stocks have in general lost value recently due to broader market concerns of slowing growth.)