High Book Value Per Share Means

Book value of a firm in an ideal world represents the value of the business the shareholders will be left with if all the assets are sold for cash and all debt is paid off today.

High book value per share means. If the market value per share is lower than the book value per share then the stock price may be undervalued. 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. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding.

Learn more about how to calculate this ratio what it tells you and how investors use it to guide their decisions. Thus this measure is a possible indicator of the value of a company s stock. Book value per share is a fairly conservative way to measure a stock s value.

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 definition of book value per shares. Book value per share is broadly used in relative valuation and usually to compare a firm s market value per share.

In other words this measures a company s total assets minus its total liabilities on a per share basis. It may be factored into a general investigation of what the. 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.

The book value per share bvps is a ratio that weighs stockholders total equity against the number of shares outstanding. 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. If a p b ratio is less than one the shares are selling for less than.

Book value per share compares the amount of stockholders equity to the number of shares outstanding. 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. Book value per common share or simply book value per share bvps is a method to calculate the per share book value of a company based on common shareholders equity in the company.