Unfortunately, the P/E ratio has inherent flaws. It's not able to account for a company's growth rate, and recessions can easily trip it up. If EPS turns negative, the P/E ratio is no longer useful.When investors think about valuing a stock, the price-to-earnings (P/E) ratio probably comes to mind. This time-tested metric is arrived at by dividing a company's share price by its trailing-12-month earnings per share (EPS). Generally, a low P/E ratio is indicative of a stock or index that's undervalued.Althoug ...