Equity Valuation Using Price Multiples

As an equity analyst, you are evaluating two companies operating in the same industry to determine which one is a better investment. Company A has a price-to-earnings (P/E) ratio of 15, while Company B has a P/E ratio of 20. You want to use price multiples to assess their relative valuation and make a recommendation to investors.

Which of the following statements is true regarding the use of the P/E ratio for valuation comparison between Company A and Company B?