|
|
| Book
Value Per Share - BV |
= |
Stockholders
Equity - Preferred Stock |
|
Average
Outstanding Shares |
|
Somewhat
similar to the earnings per share, but it relates the stockholder's
equity to the number of shares outstanding, giving the shares
a raw value.
Things
to remember |
- Comparing
the market value to the book value can indicate whether
or not the stock in overvalued or undervalued.
- During
bull markets the stock price is more likely to trade significantly
higher than book value, and in a bear market the two value's
may be close to equal.
|
[Click
on the image(s) above to see the financial statements] |
For
Cory's Tequila Co. |
$11,678
- $0 |
=
$3.57 |
3271 |
|
Book
Value Analysis:
For the most part the book value really doesn't tell us a whole
lot. Cory's Tequila Co. is trading at over $100 and the BV is only
$3.57? What is up with that? Well BV is considered to be the accounting
value of each share, drastically different than what the market
is valuing the stock at. And the truth is that market and book value
have nothing in common. Market value is what the investment community's
expectations are and book value is based on costs and retained earnings.
One situation where BV can be useful is if the market value is trading
below the book value, this rarely happens, but if it does it could
mean that the company is undervalued and might be an attractive
buy.
|
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|
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