Watch PE when valuing a company

[FFNow]

I tend to agree with what MW said - "Cash flows are the lifeblood of a company". The P&L statement is for accounting sake only. The value of a company is based upon the cash it can generate into the future. P/E gives a quick-and-dirty valuation of a business and I use it at times too. However, I don't base my stock selections only based on that. I look at FCF too. Earnings are important but it can be manipulated more easily than cash flow. If the company has good cash flow but no earnings, it might be a turnaround situation.