The paper build a simple model basing on a present value approach to analyze stock returns by using two firm-level elements: book-to-market ratio (BM)and return on equity (ROE).The result shows that the stock returns can be expressed as a linear combination of the BM and ROE. And not only on all industries of the CSRC, but also the results can be tested on the cross section. Further, the paper estimates the stock expected holding period returns. By panel regression of using quarterly data, we find that expected holding returns are time-varying but highly persistent. For all industries of the CSRC, the slope of the mode is 0.2787.