In one sentenceThe market price of a share divided by earnings per share, showing how many riyals an investor pays for every riyal of annual profit.
Simply put
If you buy a share at a multiple of 12.5, you are paying 12.5 SAR for every riyal the company earns in a year.
A high multiple may mean the market expects growth in earnings, or it may mean the price is inflated. A low one may be an opportunity or a warning of falling earnings, so it is not enough on its own to judge.
Worked example
A listed company's share price is 50 SAR, and earnings per share for the last year were 4 SAR.
Share price50 SAR
Earnings per share4 SAR
Multiple = 50 ÷ 412.5 times
Formula: Share price ÷ earnings per share
Don't confuse it with
EV/EBITDA multipleThat one measures the whole business, including its debt, before depreciation and financing; this one measures the share against net profit.