One of the usual rule used for valuation of companies is future P/E.
Which means price/ future earnings.
The idea is that you take the total company market valuation and divide it by the expected profit for the next year.
You get a number, depending on the company sector and it's growth potential the value of that number will tell you whether the stock price is too expansive or not.
P/E in the 19 were common before the crash, with company with huge growth potential having P/E as high as 40 ( which means the company is worth 40 times the money it will make next year).
With the crash P/E have fallen down a lot and till the market stabilize people are probably still trying to find out what a good P/E is for most companies.
PS3-Xbox360 gap : 1.5 millions and going up in PS3 favor !
PS3-Wii gap : 20 millions and going down !
