How to Analyze a Stock: Price to Book Value.
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- Опубликовано: 8 фев 2025
- How to Analyze a Stock: Price to Book Value. #stocks
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Great video! Price to Book Value (P/B ratio) is a key metric to look at when analyzing stocks. It's important to understand the underlying value of a company's assets, and P/B ratio helps us to do that. Thanks for the helpful explanation!
Wow an actual example. That's how you get me to follow for more
This metric on its own is pretty much useless. For example there are medical research companies that have millions in cash but are worth a fraction of that on the stock market. By the logic he uses those are massively overvalued which ignores that that money will get spend no matter if the project ends up successful
@@tomlxyzhe literally says at the end: “not every sector is the same”
These videos help odd amounts. They answer questions I have but the types of questions I don't know how to word correctly into Google. So thank you.
worth pointing out, that there typically is a reason why p/b is different. it's a good starting point but also important to find out the underlying why
Can you give any examples?
Awesome video! As a technical trader, I don’t look at these features on the fundamentals side. I will now add this to my stock selection in the future. Thank you!
Good stuff man
Great example! However how do you know if the value of the company is right? If the high staff of the company may value the company. Then this numbers isn’t as interesting.
I think that the value of the company vs the value that the company gives itself says if the stock is overpriced or not.
Price to book is a good risk management tool, or good for use in deep value investment like Benjamin Graham taught, but when companies are valued based on future earnings. If you’re going to use price to book value, there’s tons of businesses in Japan sitting there waiting for you with great price to book ratios, but tiny returns on equity.
So should you buy stocks with more or less price to book value?
since he said Citi is more attractive, i’m gonna say less book value
@@enchantedluke
Yes, less means you are getting more of a deal. Like a discount coupon when you buy something at the grocery store
Ignore book value
@@nathantorres4474 go on...
Excellent Video
Thanks!
Great vid thank you 😊. Working on educating myself financially on investing and trading down the road. ❤
I should’ve taken my financial maths class serious
Is there a case for buying overvalued stock?
Dividend Growth?
He said not all the same, so for example, a growth stock that is priced higher then boom is normal because they usually have future earnings priced in
Most stocks should be overvalued vs assets.
A company should obviously be worth more than what it owns.
I need this for EVERY SECTOR
The problem with price to book value is that it doesn’t include intangible assets. For example, the value of the patent to the iPhone is 0 dollars on Apple’s asset sheet (this is due to accounting rules set by FASB because you can’t fairly and accurately value a patent, so it’s 0 if you created it or valued at whatever you bought it for if you buy it). So it works in certain scenarios, but not all. Continuing with the Apple example, their price to book value is 44.02, however, this doesn’t mean that they’re significantly overvalued.
How does P/E ratio affect the decision making process in relation to this?
If ita undervalued then you are getting the stocks cheaper than what they should be worth, if its overvalued you are overpaying for the stock
With P/E we're more focused on earnings and how they compare to the price, so the lower the better.... Its best compare a company to its peers to get a good idea of where P/E ideallly should be...
Separately looking at the BVSP is a good way to determine the companies Networth or whay the compamy is actually worth outside of speculation.... 😅 But 🤷♂️
where do you see Citigroup stock at $57? Its at $42 right now
I'm going to assume you're not trolling. The answer is this video was not live. It was a video that was made then edited.
The book value can be incredibly misleading in most cases.
Care to elaborate?
@@jaredhammonds8255similar to the P/E ratio, the book value ratio can be misleading because the stock price and true value of a company may never intersect. This is especially true of certain sectors such as tech. The S&P007 for example all have a book value ratio higher than 1.0 and these are the best performers in the market. You can say these are all overvalued and will underperform in the future, but investors have made >100% ROI on these companies while value investors watch from the sidelines.
@jaredhammonds8255 An investment heavy business like a bank will show a much higher book value then a business with lower asset requirements or deprecated assets that pays out excess profits to shareholders consistently like coke for example. Book value of share is basically earnings not distributed divided by number of shares.
He’s wrong liquidation value is not to be confused with book value, Tangible book value is liquidation value
Not Citibank they're completely anti crypto
How to teach people idiotic ways to make investment decisions.
I would have liked a breakdown of chase and their lying asses
Basic metrics like this don’t evaluate real fundamentals of the company.
It's all monkeys and dartboard
It is true , but J.P. Morgan , being a more American less international bread , is a much better company , having a great ROTCE , and they are not run by a female , so they are considerably better .