The price-earnings multiple isn't the sole determinant of a stock's value.
Truth be told, the bottom line is only part of the story.
It may be nice to think that a single number like net income can provide an accurate view of a company's performance. At least as important as a company's profitability is its liquidity -whether or not it's taking in enough money to meet its obligations. Companies, after all, go bankrupt because they cannot pay their bills, not because they are unprofitable. Now, that's a rather obvious point. Even so, many investors routinely ignore it.