Book Value Per Share Less Than 1

Price to earnings using f 1 estimate less than x industry median.

Book value per share less than 1. A simple calculation dividing the company s current stock price by its stated book value per share gives you the p b ratio. For example a company has a p b of. If a p b ratio is less than one the shares are selling for less than the.

The p e ratio f1 values a company based on its current share price relative to its estimated earnings per share a lower. When compared to the current market value per share the book value per share can provide information on how a company s stock is valued. This company is undervalued for some reason.

Generally the book value per share is used by investors especially value investors to determine whether a share is fairly valued. If the bvps is less than the price of the stock then that tells an investor that the stock could be overvalued it costs more than the assets it s entitled to. The lower a company s price to book ratio is the better a value it generally is.

This can be especially true if a stock s book value is less than one meaning that it trades for less than the. The book value per share may be used by some investors to determine the equity in a company relative to the market value of the company which is the price of its stock. If the market book ratio is less than 1 on the other hand the company s stock price is selling for less than their assets are actually worth.

Likewise a company s book value per share will decrease after a share repurchase if the market price per share was greater than the book value per share prior to the repurchase. The price to book p b ratio is a popular way to compare market value and book value. It is equal to the price per share divided by the book value per share.

A company s book value per share will increase after a share repurchase only if the market price per share was less than the book value per share prior to the repurchase. How book value per share works. If the value of bvps exceeds the market value per share the company s stock is deemed undervalued undervalued an undervalued asset is any investment that can be purchased for less than its intrinsic value.