| Since always, P/E ratio has been received by the investor attention because it is comprehensive, easy to be operated. Investors always measure a company’s value by observing the rise or fall of P/E ratio. Prominent high p/e ratio is considered to be a signal of danger.Investors who consider high P/E ratio means high risk cannot read the high p/e ratio phenomenon in market——the stocks which move well but have excessively high P/e ratio. Shallow levels of reading can only explain general phenomenon, at the same time, the "exceptions" situation is needed to explain from another Angle.This paper first classified the influence factors which influence the discretion of the p/e ratio according to the domestic and foreign research literature and the characteristics of the Chinese stock market, considering the hidden economic significance in p/e ratio, putting forward two hypotheses:First, the company’s p/e ratio is discretion by the investors According to company growth expectations investors; Second, the growth which investors forecast convergence to the hidden growth in p/e ratio.Secondly, the paper does contrastive empirical analysis with silicon photovoltaic industry and machinery industry for example, discussing expected earnings growth rates, the past earnings per share, instant earnings per share dividend payment rate, to the influence of the P/E ratio. The results indicate that the expected growth rate the decisive role, which illustrates investors regard the company’s future expectations more important than the past performance in same company.Finally, this paper, by using the recovered mode to research the quantity relationship between the P/E ratio and the growth rate of the implied, derived the expected growth rate implied from P/E ratio, then do related analysis with investors expected growth rate. The results prove that the fit degree is significant between implied growth rate and investors expected growth rate. |
