Book Value Per Share

Indicator Description

The naive approach to look at Book Value per Share is to compare it to current stock price. If Book Value per Share is higher than the currently traded stock price, the company can be considered undervalued. 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.

Book Value per Share 
 = 
Common Equity 
Average Shares 

Book Value per Share (B/S) can be calculated by subtracting liabilities from assets, and then dividing it by the total number of currently outstanding shares. It indicates the level of safety associated with each common share after removing the effects of liabilities. In other words, a shareholder can use this ratio to see how much he or she can sell the stake in the company in the event of a liquidation.

Book Value Per Share In A Nutshell

Book value per share will help people who own the share determine the value of their shares if the company should close and liquidate their assets and paying anyone they owe money too. This is important because if you invest in companies that are not stable and may be speculative, you want to know how much you will potentially receive should the company go under. Obviously one should not invest much into these types of situations, but there are times and places where this could be beneficial.

Book value per share is taking the total shareholder equity and subtracting out the preferred equity, and then dividing it by the shares outstanding. A simple formula that will give you the book value you are searching for.

Closer Look at Book Value Per Share

Book value per share could also be a way to measure the potential risk. If you determine a book value to be $10 and the stock is trading above the book value, you could use that as a stop loss. Measuring risk is important to any portfolio and should be done carefully because profits are good, but being safe from risk is also just as good.

Book value will likely change because outstanding share may fluctuate as stock is either pumped into the market or taken out. Also, be sure to look at the top of the equation and understand what is fueling these numbers and how it might give you an edge in investing. If you get stuck, there are wonderful tools on the Internet that can help show you how people use this in their research. Join an investing community and see how others are using this tool in their research. This will allow you to see real time examples and as real time questions. Lastly, if you need more guidance, reach out to an investing professional and they can help show you the best ways to use this tool and implement it in your current investing research.

Other Suggestions

Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.

Explore Investing Ideas

You can quickly originate your optimal portfoio using our predefined set of ideas and optimize them against your very unique investing style. A single investing idea is a collection of funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of investment themes. After you determine your investment opportunity, you can then find an optimal portfolio that will maximize potential returns on the chosen idea or minimize its exposure to market volatility.

Did you try this?

Run Pattern Recognition Now

   

Pattern Recognition

Use different Pattern Recognition models to time the market across multiple global exchanges
All  Next Launch Module
Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

Other Complementary Tools

Global Correlations
Find global opportunities by holding instruments from different markets
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Bond Directory
Find actively traded corporate debentures issued by US companies
Go
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Go
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go