Equity returns before valuation adjustments are a function of earnings growth (which have their root in GDP growth) and dividend yield including stock buybacks.
What price-earnings ratio to put on the market is more of a function of the going inflation rate and the confidence level of the recession's depth and duration.
It calculates an intrinsic value by discounting a stream of future earnings back to the present, using a discount rate that is a function of both Aaa bond yields and the creditworthiness of the target company.