Historical data estimation methods are divided into arithmetic average method, trend adjustment method and regression adjustment method.

Market determination methods are divided into: reciprocal method of market expected rate of return and market classification determination method.

(2) Regression analysis method

Regression analysis refers to the statistical method of regression analysis. By investigating the relationship between stock price, income, growth, risk, time value of money, dividend policy and other factors and P/E ratio, the equation that can best explain the linear relationship between P/E ratio and these variables is obtained, and then the P/E ratio is predicted according to the given values of these variables.

One common feature of all these models is that they can explain the performance of stock prices at a certain moment, but rarely successfully explain the complex changes in the market over a long period of time.

There may be three reasons for this defect:

(1) Changes in market interest. When the market interest changes, the coefficients representing the weight of each variable will also change.

(2) Changes in data values, such as the growth rate of stock returns, change with time.

(3) There are other important factors that have not been captured by this model.