Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open.

What effect does a company's earnings have on the price of its stock?
Market price of a stock typically trades in a range of Price/Earnings Ratio (P/E ratio). Or in other words, price of a stock = Earnings * P/E ratio Because of this direct proportionality of stock price with earnings, stock prices move in tandem with earnings.