The big debate when you use P/E ratio to value a stock is whether to use rolling P/E (historic P/E based on last 4 quarter EPS) or forward P/E based on projections. While the rolling P/E is more reliable as it is documented, it is more useful from an academic perspective and less from a valuation perspective. However, the big worry about cash flow projections is that they are prone to the assumptions and personal biases of individuals. It is quite normal for analysts to get a little aggressive on projections and then downgrade the projections. Hence, apart from the fundamentals of the company, one also needs to look at the track record of the analyst in question.
In a nutshell, P/E ratio to value a stock is perhaps the best approximation available. However, one needs to adjust a pure P/E measure for growth, futuristic signals and one also needs to provide for the individual bias. That is How to avoid the P/E trap!