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Book value per share

Category:Metrics
Alternative names: equity per share

What is Book Value per share

Book value per share is simply the number that we get when we divide the company book value (also know as equity) by the number of outstanding shares that the company has in total. Book value or equity is the company total assets minus the total liabilities. The equity can be found on a company’s balance sheet and it is one of the most common financial metrics used by investors to assess the financial health of a company. Book value per share is simply the equity of the company divided by the number of shares and it is useful as it gives us the value in a per share format that makes it more intuitive to compare it with the price of the stock of the company.

How to calculate book value per share

Calculating the book value per share is very simple, all we need to know is the Book value of a company and the total number of common outstanding shares of the company. Formula:

Book Value per Share = Shareholders’ Equity ÷ Number of Common Outstanding Shares

The Book value or Equity can be found on the balance sheet of the company financial reports. Shares outstanding refers to all shares currently owned by stockholders, company officials, and investors in the public domain, but does not include shares repurchased by a company.The number of shares outstanding is also listed on a company’s balance sheet usually under the name “Capital Stock”. We base the calculation on the common stockholders’ equity, and therefore the preferred stock should be excluded from the value of equity. This is because preferred stockholders are ranked higher than common stockholders during liquidation and the Book Value per share represents the value of equity that remains after paying up all debts and the company’s assets liquidated.

Why us Book Value per share important

The only difference between book value per share and Book value or Equity is that the formal is represented in a per share basis. The benefits of this is that it is more intuitive when comparing the equity of the company with the share price of the company.

For example, a company that has a stock price of $50 but has a book value per share of $25 is selling at twice its equity value. The per share value of equity is also used in the price to book value (P/B) ratio, in which book value per share is used in the denominator. It is important to notice that book value number does not reflects the future growth potential of the company.

Stocks with high PB ratio

Name Price to book (P/B) Marketcap Industry
MOVE Movano Inc 19.94 $336.92M Medical Devices
SYY Sysco Corp 19.89 $36.51B Food Distribution
MAIA MAIA Biotechnology Inc 19.89 $68.85M Biotechnology
CRVL Corvel Corp 19.83 $5.24B Insurance Brokers
BAH Booz Allen Hamilton Holding Corp 19.74 $23.44B Consulting Services
VVI Viad Corp 19.7 $813.14M Specialty Business Services
WRAP Wrap Technologies Inc 19.68 $78.45M Scientific & Technical Instruments

What is a good number for Book value per share

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. If the value of Book Value per share exceeds the market value per share, the company’s stock can be considered as undervalued (at least on an asset/equity basis).

Related terms