Book Value Per Share Higher Or Lower Better

Also defined as a firm s next asset value book value per share is essentially the total assets of a company but not counting a firm s assets and liabilities.

Book value per share higher or lower better. This is because in all probability there s an error in the report you are using for book value. The price to book p b ratio has been favored by value investors for decades and is widely used by market analysts. More specifically this value is determined by relating the original value of a firm s common stock adjusted for any outflow dividends and stock buybacks and inflow retained earnings modifiers to the amount of shares outstanding.

Book value is not very useful in the latter case but for companies with solid assets it s often the no 1 figure for investors. Let me explain why. However investors must be aware that conventional calculation of book value does not include intangible assets such as goodwill intellectual property trademarks or brands and may not be an appropriate measure for many firms.

If book value per share is higher than the currently traded stock price the company can be considered undervalued. So higher book value means the shares have more liquidation value. About 4 8 billion shares were outstanding at the time so the book value per share was about 23 96 per share.

There may be reasons to look for low book value such as pursuing investments that the market. The formula is known as the graham number and it represents the maximum price that you should pay for a stock according to its earnings per share eps and book value per share bvps. Strictly speaking the higher the book value the more the share is worth.

Book value of equity per share bvps is a financial measure that represents a per share assessment of the minimum value of a company s equity. It is not advisable to buy a share where book value per share is 4 times greater than the current market price per share. Apple stock closed on june 29 2018 at 185 11 per share.

Traditionally any value under 1 0 is considered a good p b value indicating a. In other words if the graham number the present value is higher than the market price the stock is undervalued and vice versa. When book value per share is high.