The price to tangible book value ratio ptbv expresses share price as a proportion of the companys tangible book value reported on the companys balance. The pricetobook ratio, or pb ratio, is a financial ratio used to compare a companys current market price to its book value. This is key in the current 200820092010 environment. Find out all the key statistics for bank of america corporation bac, including valuation measures, fiscal year financial statistics, trading record, share statistics and more. Book value per share compares the amount of stockholders equity to the number of shares outstanding. In theory, a stocks tangible book value per share represents the amount of money an investor would receive for each share if a company were. For financial companies such as banks and insurance companies, their assets may be reported in current market value of the assets owned. The book value per share of bank ozk ozk has grown 7. The market value of the equity is the total amount that people would pay today to own all of that balance sheet equity. Bank dividends and book values to come under deep scrutiny. Cohen called investor fixation on tbvps dilution a new problem and observed that it is hard to pay a price that investors demand and keep the earnback period within five years. In the first way, the companys market capitalization can be divided by the companys total book value from its balance sheet. In depth view into bank of america tangible book value per share including historical data from 1973, charts, stats and industry comps.
How to figure the book value of bank stock finance zacks. The wide range of pb ratios for these banks stands out in the table above. If, for some reason, a company were to cease trading permanently, the people who had put money into the business its shareholders and creditors get their money out by having the assets of the company sold and converted into cash. It excludes value of intangible assets from book value of shareholders equity used in the normal book value per share calculation. In other words, the value of all shares divided by the number of shares issued. A bank s tangible book value is the book value of its common shares, less intangible assets, such as loan servicing rights, goodwill and deferred tax assets. Tangible book value per share is calculated as the total tangible equity divided by. Price to tangible book value is how much a banks stock is trading for relative to the value of its assets. If you want to be more conservative in your valuation, you many also choose to use only the tangible book value where the intangibles, such as goodwill, are backed out of the book value per share. How to figure the book value of bank stock pocketsense. Bank ozk was named best bank in the south for 20192020 by money, the personal finance news and advice brand. The secondlargest public sector bank has a welldiversified book with 32% exposure to overseas markets. Provident financial reports q2 eps 38c, consensus 47c.
At the same time, we use book value in the case of roe formula when we calculate the roe per share. Remove intangibles tangible assets are those that can be touched and measured for example, cash in the bank, inventory, or a factory. Tips analysts can compare the book value of the bank stock to the market value of the bank stock to determine if it is over. Find the latest book value per share for bank of america corporation bac. A tangible book value per share tbvps is a method of valuing a company on a pershare basis by measuring its equity after removing any. The tbv excludes a firms intellectual property, patents, and trademarks because these are intangible assets that cannot be easily sold such as property, plant, and equipment. Citi is only major bank stock to trade below book value. Tangible book value per share book value also known as equity, shareholders funds, or net asset value is the value of all a companys assets, minus its liabilities. One part of the interview surely resonated with bank investors. Hence, bank of americas price to tangible book ratio of today is 1. Bank of america stock has come roaring back from the brink, and over the past 12 months is up a whopping 65%, substantially outpacing both. Book value per share is a widely used stock evaluation measure. The calculation can be performed in two ways, but the result should be the same each way. Find the latest book value per share for wells fargo company wfc.
Many banks are quite fond of issuing preferred shares. Book value per common share is a measure used by owners of common shares in a firm to determine the level of safety associated with each share after all debts are paid accordingly. If this information is unavailable, you may need to contact the company to get it. As you know, we believe tangible book value per share is a good measure of the value we have created for our shareholders. The tangible book value per share tbvps shows the amount per share that shareholders would expect if the firm was liquidated today. Some recent deals come to mind that have entailed a lot of. To arrive at this number, subtract liabilities from assets. To calculate the tangible book value per share, malcolm finds that the firms number of shares outstanding is 2,000,000 million. When stock is trading below its tangible book value per share, it might be considered undervalued. Bank of america corporation bac valuation measures. In the case of a mutual fund, this is the per share prorated value of the securities underlying the fund. It is calculated once per day at the end of the trading day and functions as the share price of the mutual fund for the next trading day. Tangible common equity for beginners the baseline scenario. The balance sheet lists no intangible assets, but a fair amount of goodwill drags the companys.
Thus, this measure is a possible indicator of the value of a companys stock. The second way, using pershare values, is to divide. Unlike other psu banks, the market share of the bank rose between 200607. If the market value per share is lower than the book value per share, then the stock price may be undervalued. Heres how investors should value bank of americas stock.
Bank of america corporation bac book value per share. Book value per share formula how to calculate bvps. Is tangible book value per share dilution an insurmountable investor fixation. Hence, bank of america corporations pricetobook ratio for the period was 1. The chart shows the increase in tangible book value per share. Depreciation is the reduction of an items value over time. Total tangible equity is calculated as the total stockholders equity minus preferred stock minus intangible assets. Book value per share is determined by dividing common shareholders equity by total number of outstanding shares.
When valuing a bank, price to tangible book value is more important than in most other stocks. Not foolproof as a standalone valuation metric, bank book. Book value per share tells investors what a banks, or any stocks, book value is on a pershare basis. In the case of an exchangetraded fund, closedend fund, or stock, this is the expression of. View tangible book value per share for db access over 100 stock metrics like beta, evebitda, pe10, free cash flow yield, kz index and cash conversion cycle. Tangible book value per share tbvps is a method by which a companys value is determined on a pershare basis by measuring its equity without the inclusion of any intangible assets. Bank of americas tangible book value per share for the quarter that ended in mar. Book value per common share financial definition of book. Stocks trading below their book value can give decent. Tangible book value per share is the pershare value of a companys equity after removing any intangible assets. Data shown on this page is extracted directly from the companys documents. The pricetotangiblebookvalue ratio excludes intangible assets and goodwill. The market value of equity is generally different from the book value balance sheet value of equity, because if you own a company, you own not only todays.
The book value per share is a market value ratio that weighs stockholders equity against shares outstanding. A tangible asset is anything that has commercial or exchange value and has a physical form. Tangible book value per share dilution incurred by buyers and the time it takes to recover it. Tangible book value per share tbvps definition investopedia. Book value per share financial definition of book value. Tangible book value per share tbvps equals a companys net tangible assets divided by its number of shares outstanding. Summit financial group reports corrected book value per. Book value of an asset refers to the value of an asset when depreciation is accounted for.
A variant of book value per share is called tangible book value per share. Better yet, you should probably use price to tangible common equity since it also takes off preferred shares, which are basically debt too. What does it mean if a company has a negative tangible. These bank stocks trade at discounts of up to 54% and.