Book Value Per Share Graham

Book value provides a good indication of the underlying value of a company.

Book value per share graham. By combining the two into one number 22 5 it allows some wiggle room for one or the other to be a little high. Named after benjamin graham the founder of value investing the graham number can be calculated as follows. If the total value of a company is 10 million and it has 1 million shares of stock outstanding.

P bv ratios are calculated by dividing the current price by the most recent book value per share for a company. Find companies with price to book value p bv ratios less than 1 20. The graham number or benjamin graham number is a figure used in securities investing that measures a stock s so called fair value.

Book value per share can be defined as the amount of equity available to shareholders expressed on a per common share basis. P e ratios mentioned in rule 5 can sometimes be misleading. It has a 10 per share book value.

Book value per share bvps shareholder equity total outstanding common shares 22 5 the number set by graham. Now the shares will trade at whatever value the market gives them based on future expectations being good or bad and technical price action patterns the book value is only the current fundamental intrinsic value of the company based on. Example of graham number for example if the earning per share for a single share of company abc is 1 50 the book value per share is 10 the graham number would be 18 37.

The book value per share and the market value per share are some of the tools used to. Prefer using the bvps as a. 22 5 earnings per share book value per share displaystyle sqrt 22 5 times text earnings.