Book Value Of Equity Per Share - BVPS

AAA

DEFINITION of 'Book Value Of Equity Per Share - BVPS'

A financial measure that represents a per share assessment of the minimum value of a company's equity. 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.

Calculated as:

Book Value Of Equity Per Share (BVPS)


INVESTOPEDIA EXPLAINS 'Book Value Of Equity Per Share - BVPS'

While book value of equity per share is one factor that investors can use to determine whether a stock is undervalued, this metric should not be used by itself as it only presents a very limited view of the firm's situation. BVPS provides a snap shot of a firm's current situation, but considerations of the firm's future are not included.

For example, XYZ Corp, a widget producing company, may have a share price that is currently lower than its BVPS. This may not indicate that the XYZ is undervalued, because looking ahead, the growth opportunities for the company are vastly limited as fewer and fewer people are buying widgets.

RELATED TERMS
  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Market Value

    The price an asset would fetch in the marketplace. Market value ...
  3. Market Value Of Equity

    The total dollar market value of all of a company's outstanding ...
  4. Tangible Book Value Per Share - ...

    A method of valuing a company on a per-share basis by measuring ...
  5. Buyback

    The repurchase of outstanding shares (repurchase) by a company ...
  6. Book Value

    1. The value at which an asset is carried on a balance sheet. ...
RELATED FAQS
  1. What does it mean if a share's market value is significantly higher than its book ...

    If a share’s market value is significantly higher than its book value per common share, this usually indicates investors ... Read Full Answer >>
  2. What's the difference between book and market value?

    Book value is the price paid for a particular asset. This price never changes so long as you own the asset. On the other ... Read Full Answer >>
  3. How is convertible bond valuation different than traditional bond valuation?

    Convertible bonds have features of equity securities since they can be conditionally converted into shares. This makes them ... Read Full Answer >>
  4. How does portfolio management software work?

    There are numerous varieties of portfolio management software. The essential function of portfolio management software is ... Read Full Answer >>
  5. How accurate is the equity risk premium in evaluating a stock?

    The equity risk premium can provide some guidance to investors in evaluating a stock, but it attempts to forecast the future ... Read Full Answer >>
  6. What's the difference between the coverage ratio and the levered free cash flow to ...

    Coverage ratios focus on a company’s ability to manage its debt, while the levered free cash flow to enterprise value ratio ... Read Full Answer >>
Related Articles
  1. Markets

    Relative Valuation Of Stocks Can Be A Trap

    This method of valuing a company can make it look like a bargain when it is not.
  2. Forex Education

    Using The Price-To-Book Ratio To Evaluate Companies

    The P/B ratio can be an easy way to determine a company's value, but it isn't magic!
  3. Fundamental Analysis

    Analyzing Retail Stocks

    To analyze retail stocks, investors need to be aware of the most common metrics used. Find out what they are.
  4. Markets

    Book Value: How Reliable Is It For Investors?

    In theory, a low P/B ratio means you have a cushion against poor performance. In practice, it is much less certain.
  5. Fundamental Analysis

    What is Quantitative Analysis?

    Quantitative analysis refers to the use of mathematical computations to analyze markets and investments.
  6. Charts & Patterns

    How to Analyze Pharma Stock Fundamentals

    What you need to know about analyzing the fundamentals of pharma stocks.
  7. Charts & Patterns

    Why These May Be the Top 4 Growth Stocks of 2015

    These four stocks have high upside potential in 2015.
  8. Charts & Patterns

    Are These the Top Dividend Stocks of 2015?

    These dividend-paying companies offer a lot more than just dividends.
  9. Charts & Patterns

    Top 10 Alternative Energy Stocks for 2015

    As energy demands continue to rise, the alternative energy sector is heating up. Here are the top 10 promising alternative energy stocks for 2015.
  10. Charts & Patterns

    Why Is Chipotle So Successful & Popular?

    Chipotle's emphasis on simplicity and high-quality ingredients have made the restaurant immensely popular among consumers and, in turn, investors.

You May Also Like

Hot Definitions
  1. Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment ...
  2. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  3. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  4. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  5. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  6. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
Trading Center