What Does Price-To-Book Ratio - P/B Ratio Mean?
A ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share.
Also known as the "price-equity ratio".
Calculated as:
A ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share.
Also known as the "price-equity ratio".
Calculated as:
Investopedia explains Price-To-Book Ratio - P/B Ratio
A lower P/B ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company. As with most ratios, be aware that this varies by industry.
This ratio also gives some idea of whether you're paying too much for what would be left if the company went bankrupt immediately.
CEMJQ CLOSING PRICE 10/30/09 = .96
CEMJQ BV BASED ON 3RD QUARTER RESULTS = $1.42 (PRICE ESTABLISHED IN PREVIOUS POST)
PRICE-TO-BOOK RATIO = .96/1.42 = .68
.68 PB RATIO = BUY NOW BECAUSE CEMJQ IS A BARGAIN ACCORDING TO THE PB RATIO.
A lower P/B ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company. As with most ratios, be aware that this varies by industry.
This ratio also gives some idea of whether you're paying too much for what would be left if the company went bankrupt immediately.
CEMJQ CLOSING PRICE 10/30/09 = .96
CEMJQ BV BASED ON 3RD QUARTER RESULTS = $1.42 (PRICE ESTABLISHED IN PREVIOUS POST)
PRICE-TO-BOOK RATIO = .96/1.42 = .68
.68 PB RATIO = BUY NOW BECAUSE CEMJQ IS A BARGAIN ACCORDING TO THE PB RATIO.
I am the author of the Lehman Blog. Love your site. Keep up the good work on CEMJQ. I am also invested there and Tronox (B shares only right now.)
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