Gem Valuation Methods And Empirical Applications

When evaluating the stock in the Growth Enterprise Market (GEM), the growth of the enterprise, the price-earnings ratio and the fundamentals company, no doubt is the most important aspect. In this paper, I constructed a PEG multi-factor valuation method, which including and quantified these three most important factors in order to evaluate the stocks, and verified the suitability of the model through empirical analyzing.At first, combining the characteristics of enterprise in the GEM, we compared the various valuation and pricing methods, and finally we found the PEG stock selection method of Peter Lynch is more appropriate for evaluating the stocks in the GEM.Then, based on PEG stock selection method, we construct the PEG valuation method. In this method, the calculation of the firm growth rate has been adjusted. In addition, the model also proposed a "base PEG factor" concept, which considered the different periods, different characteristics of the market environment, in order to make the PEG valuations more closely with the stock price which judged by different market conditions.Next, in order to compensate for the neglect of business fundamentals, I proposed "fundamentals of entrepreneurial business Optimization Index" system. Then, we quantified the affect as correlation coefficientβ. Based on the PEG valuation model, we created The PEG multi-factor valuation method.Finally, we demonstrated the feasibility of the PEG multi-factor valuation method through empirical analysis. This method has a certain significance in evaluating the stocks with high growth rate or equity investment.