High Book Value Per Share Means

The book value per share formula is used to calculate the per share value of a company based on its equity available to common shareholders.

High book value per share means. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. It may be factored into a general investigation of what the. If a firm s bvps is higher than its market value per share then the stock is undervalued which means that it trades lower than the price that the market determines.

The book value per share bvps is a ratio that weighs stockholders total equity against the number of shares outstanding. The term book value is a company s assets minus its liabilities and is sometimes referred to as stockholder s equity owner s equity shareholder s equity or simply equity. What is the book value per share bvps.

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. If a p b ratio is less than one the shares are selling for less than. It is therefore a much more conservative way of valuing a company than using earnings based model where one needs to estimate future earnings and growth.

In other words this measures a company s total assets minus its total liabilities on a per share basis. The book value of a company stripped to basics is the value of the company the stockholders will own if the firm s. What is the definition of book value per shares.

If the market value per share is lower than the book value per share then the stock price may be undervalued. Thus this measure is a possible indicator of the value of a company s stock. Book value per share compares the amount of stockholders equity to the number of shares outstanding.

Book value per share is broadly used in relative valuation and usually to compare a firm s market value per share. A simple calculation dividing the company s current stock price by its stated book value per share gives you the p b ratio. What does book value per share mean.