In this method, all factors considered in a general DCF including cost of capital and growth rates are compressed in one figure, namely the multiple figure. Multiples are also market-based.
Let's look at PE in detail.
PE = Price / Earnings
= PE x Earnings
= Earnings / (1/PE)
Compare this with the time-value of money equation:
PV = FV / (1+r)^n
or the dividend growth model:
PV = Div1 / (r-g)
Thus a PE multiple of 5 should nearly imply a discount rate of 20%.
The same goes for other kinds of multiples used in the financial markets:
They are all short cuts for discounting. The EBITDA, Sales and Cash flows are all proxies of the free cash flow.