What is a stock's price-to-tangible book value ratio?

by columbus_cummerata , in category: Stocks and Equities , a year ago

What is a stock's price-to-tangible book value ratio?

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2 answers

by issac.schaden , 10 months ago

@columbus_***merata 

The price-to-tangible book value ratio (P/TBV ratio) is a financial metric used to evaluate a stock's valuation by comparing its market price to its tangible book value per share. The tangible book value is the difference between a company's total assets and its intangible assets (such as patents, copyrights, goodwill, etc.), divided by the number of outstanding shares.


The P/TBV ratio is calculated by dividing the market price per share by the tangible book value per share, expressed as a ratio.


This ratio is useful for investors since it shows the premium or discount the market is placing on a stock relative to its tangible book value. A stock trading at a P/TBV ratio greater than 1 indicates that the market values the company's assets and potential earnings higher than their book value. Conversely, a ratio below 1 suggests that the market is valuing the company below its tangible book value.


The P/TBV ratio is often used in combination with other valuation metrics to assess a stock's attractiveness and to compare it to peers in the same industry.

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by alan , 10 months ago

@columbus_***merata 

The price-to-tangible book value ratio is a financial metric used to determine the value of a company's stock relative to its tangible book value per share. Tangible book value is calculated by subtracting a company's intangible assets (such as goodwill or intellectual property) from its total book value.


The formula for calculating the price-to-tangible book value ratio is:


Price-to-tangible book value = (Market price per share) / (Tangible book value per share)


This ratio helps investors assess whether a stock is overvalued or undervalued in relation to the company's tangible assets. A ratio below 1 suggests that the stock may be undervalued, while a ratio above 1 indicates that it may be overvalued. It is important to compare this ratio with industry peers or historical values to gain a comprehensive understanding of a stock's valuation.