Home Depot Price/Book Ratio Historical Data
| Date | Stock Price | Book Value per Share | Price to Book Ratio |
| 2022-07-19 | 299.83 | 0.00 | |
| 2022-04-30 | 298.49 | $-1.66 | -179.73 |
| 2022-01-31 | 362.48 | $-1.64 | -221.21 |
| 2021-10-31 | 365.67 | $0.99 | 369.55 |
What is price-to-book ratio?
Price-to-book ratio, or P/B ratio, compares a company's market price to its book value. Analyzing the price-to-book ratio lets you spot stocks for value investing. To calculate the P/B ratio, divide the company's market cap by its total book value.
What is the book value of a stock?
The book value is defined as the difference between the book value of assets and the book value of liabilities . Investors use the price-to-book value to gauge whether a stock is valued properly. A P/B ratio of one means that the stock price is trading in line with the book value of the company.
How do you calculate book value and P/B ratio?
To arrive at book-value-per share, divide the book value by the number of shares outstanding, as shown in the formula below. To calculate the P/B ratio, the market price of the stock is divided by the book value per share. Let's say that a company has the following information:
What is the current price to book ratio for Deere?
The current price to book ratio for Deere as of June 07, 2022 is 5.87. Please refer to the Stock Price Adjustment Guide for more information on our historical prices.
What is a good price-to-book ratio for a stock?
The price-to-book (P/B) ratio has been favored by value investors for decades and is widely used by market analysts. Traditionally, any value under 1.0 is considered a good P/B value, indicating a potentially undervalued stock. However, value investors often consider stocks with a P/B value under 3.0.
What if a price-to-book ratio is less than 1?
Price-to-book ratios below 1 are usually considered solid investments. A price-to-book less than 1 ratio could mean the stock is undervalued and worth buying. A price-to-book ratio greater than 1 indicates that the stock price is trading at a premium to the company's book value.
What is the price-to-book ratio formula?
The price-to-book ratio (P/B) is calculated by dividing a company's market capitalization by its book value of equity as of the latest reporting period. Alternatively, the P/B ratio can be calculated by dividing the latest closing share price of the company by its most recent book value per share.
What does a high PB ratio mean?
A High Price-to-Book (P/B) Ratio A P/B ratio that's greater than one suggests that the stock price is trading at a premium to the company's book value. For example, if a company has a price-to-book value of three, it means that its stock is trading at three times its book value.
Is high PB ratio good?
Conventionally, a PB ratio of below 1.0, is considered indicative of an undervalued stock. Some value investors and financial analysts also consider any value under 3.0 as a good PB ratio. However, the standard for “good PB value” varies across industries.
What is good PE ratio?
As far as Nifty is concerned, it has traded in a PE range of 10 to 30 historically. Average PE of Nifty in the last 20 years was around 20. * So PEs below 20 may provide good investment opportunities; lower the PE below 20, more attractive the investment potential.
What is PB ratio with example?
The PBV ratio is the market price per share divided by the book value per share. For example, a stock with a PBV ratio of 2 means that we pay Rs 2 for every Rs. 1 of book value. The higher the PBV, the more expensive the stock.
Is a negative PE ratio good?
A high P/E typically means a stock's price is high relative to earnings. A low P/E indicates a stock's price is low compared to earnings and the company may be losing money. A consistently negative P/E ratio run the risk of bankruptcy.
How do you calculate price to book ratio in Excel?
Example Calculation of Market to Book Ratio in Excel Market Cap is equal to share price times shares outstanding. Net Book Value is equal to Total Assets minus Total Liabilities.
Why is Pb ratio important?
The price-to-book ratio is important because it can help investors understand whether the market price of a company seems reasonable when compared to its balance sheet.
Should PE ratio be high or low?
P/E ratio, or price-to-earnings ratio, is a quick way to see if a stock is undervalued or overvalued. And so generally speaking, the lower the P/E ratio is, the better it is for both the business and potential investors.
Is higher book value better?
A book value that is low can reflect that a company's stock is undervalued. Conversely, a book value that is high can reflect that a company's stock is overvalued.
What does a P/B ratio mean?
A P/B ratio that's greater than one suggests that the stock price is trading at a premium to the company's book value. For example, if a company has a price-to-book value of three, it means that its stock is trading at three times its book value. As a result, the stock price could be overvalued relative to its assets.
What does a high stock price mean?
However, the high stock price could indicate that most of the goods news regarding the company has already been priced into the stock. As a result, any additional good news might not lead to a higher stock price.
Why is P/B ratio important?
The ratio is higher for some industries than others. So, it's important to compare it to companies with a similar makeup of assets and liabilities. A P/B ratio analysis is an important part of an overall value investing approach.
How does debt affect P/B?
Debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. Highly leveraged companies, such as cable and wireless telecommunications companies, have P/B ratios that understate their assets.
Does book value help with debt?
Book value does not offer insight into companies that carry high debt levels or sustained losses. Debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values.
Can a company boost its cash reserves?
At the same time, companies can boost or lower their cash reserves, which, in effect, changes book value but with no change in operations. For example, if a company chooses to take cash off the balance sheet, placing it in reserves to fund a pension plan, its book value will drop.
Is Microsoft's share value related to its book value?
As a result, Microsoft's share value bears little relation to its book value.
Deere & Company (DE)
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
About Price to Book Value
The Price to Book ratio or P/B is calculated as market capitalization divided by its book value. (Book value is defined as total assets minus liabilities, preferred stocks, and intangible assets.) In short, this is how much a company is worth. Investors use this metric to determine how a company's stock price stacks up to its intrinsic value.
How to find price to book value?
To determine a company's book value, you'll need to look at its balance sheet. Also known as shareholder's equity or stockholder's equity, this amount is equal to the company's assets minus its liabilities.
Why is price to book important?
Price to book is useful only for evaluating certain types of businesses. If most of a business's assets are intangible -- as is the case with many technology companies -- its price to book may be unhelpfully high. Software giant Microsoft, for example, trades for more than 10 times its book value. On the other hand, price to book can be useful ...
What does it mean when a stock is less than one?
This can be especially true if a stock's book value is less than one, meaning that it trades for less than the value of its assets. Buying a company's stock for less than book value can create a "margin of safety" for value investors. However, a very low P/B ratio can also be a sign of trouble at a company, so it should be used as part ...
Why are assets not always valued correctly?
For example, the correct market value of the equipment or inventory or the property may be different than the company may be recording based on the standardized depreciation schedules.
Is a stock overvalued?
Perhaps the stock is not overvalued in this case . It is always a good idea to dig deeper than just reading off the book value from the balance sheet. Some industries tend to have lower tangible assets and the stock can trade at higher book multiple naturally.
Is a high price to book ratio overvalued?
Generally investors come to think of a high price to book ratio as overvalued as the price may be too high given the book value of the stock. This may be true in most cases, and indeed there is empirical evidence that a bias towards low price to book stocks tends to improve returns as it biases the portfolio towards value.
Why is price to book ratio important?
Price-to-book ratios are commonly used to compare banks because most assets and liabilities of banks are constantly valued at market values. A higher P/B ratio implies that investors expect management to create more value from a given set of assets.
How to calculate market capitalization ratio?
If you choose to calculate the ratio the first way, the company's market capitalization is divided by the company's total book value from its balance sheet. But, if you choose to calculate the ratio the second way (i.e., using per-share values), you must divide the company's current share price by the book value per share.
What is the P/B ratio?
Simply put, the price-to-book ratio, or P/B ratio, is a financial ratio used to compare a company's current market price to the book value. It is also sometimes known as a market-to-book ratio.
Is P/B ratio comparable?
When accounting standards applied by firms vary, P/B ratios may not be comparable, especially for companies from different countries. Additionally, P/B ratios can be less useful for services and information technology companies with few tangible assets on their balance sheets.
What Is The Price-to-Book (P/B) Ratio?
What The P/B Ratio Can Tell You
- The P/B ratio reflects the value that market participants attach to a company's equity relative to the book value of its equity. A stock's market value is a forward-looking metric that reflects a company's future cash flows. The book value of equity is an accounting measure based on the historic cost principle and reflects past issuances of equity, augmented by any profits or losses, …
Example of How to Use The P/B Ratio
- Assume that a company has $100 million in assets on the balance sheet and $75 million in liabilities. The book value of that company would be calculated simply as $25 million ($100M - $75M). If there are 10 million shares outstanding, each share would represent $2.50 of book value. If the share price is $5, then the P/B ratio would be 2x (5 / 2.50). This illustrates that the m…
P/B Ratio vs. Price-to-Tangible-Book Ratio
- Closely related to the P/B ratio is the price to tangible book value ratio (PTBV). The latter is a valuation ratio expressing the price of a security compared to its hard, or tangible, book value as reported in the company's balance sheet. The tangible book value number is equal to the company's total book value less than the value of any intangible assets. Intangible assets can b…
Limitations of Using The P/B Ratio
- Investors find the P/B ratio useful because the book value of equity provides a relatively stable and intuitive metric they can easily compare to the market price. The P/B ratio can also be used for firms with positive book values and negative earnings since negative earnings render price-to-earnings ratios useless, and there are fewer companies with negative book values than compani…
What Is The Price-to-Book Ratio?
How to Calculate The Price-to-Book Ratio
| DATE | STOCK PRICE | BOOK VALUE PER SHARE | PRICE TO BOOK RATIO |
|---|---|---|---|
| 2021-04-30 | 369.90 | $48.39 | 7.64 |
| 2021-01-31 | 287.37 | $44.94 | 6.39 |
| 2020-10-31 | 224.15 | $41.27 | 5.43 |
| 2020-07-31 | 174.33 | $41.14 | 4.24 |
| 2020-04-30 | 142.73 | $37.92 | 3.76 |
| 2020-01-31 | 155.20 | $38.04 | 4.08 |
| 2019-10-31 | 169.68 | $36.46 | 4.65 |
| 2019-07-31 | 160.68 | $38.97 | 4.12 |
Significance of The Price-to-Book Ratio
- The price-to-book ratio expresses a company's stock share price in relation to its book value per share (BVPS). "Book value" refers to a company's intrinsic, financial worth — specifically, the difference between all its assets and all its expenses and debts. Though officially a ratio, the P/B ratio is often just expressed as a single number. Some ...
How Accurate Is The Price-to-Book Ratio?
- Step 1:Get the current share price. That's simple enough, since it pops up quickly in an online search using the company's name or its ticker symbol. Step 2:Determine the book value per share (BVPS). The easy way is to look it up on a financial stock-listing site (you may have to scroll down a bit to find it). Or for DIY-ers: The first move is to figure out the "book value," or "net book value," …
The Bottom Line
- Some analysts say a P/B ratio of less than 1 indicates that a stock is undervalued and, everything else being equal, it may be poised for a rise. A ratio of 1 may indicate "fair" pricing, where the market value is equal to the company's book value. A P/B ratio of 3 or higher could signal a market value that's too high and may be ready for a fall. That being said, it's tricky to determine a single …
What Is The Price-to-Book (P/B) Ratio?
- "Price-to-book has a long history, but there are some drawbacks that have driven it to fall out of favor among some investors," Tadesse says. For one thing, price-to-book "doesn't account for hard-to-value intangible assets, like patents or other intellectual property," he says, adding "the book value is an accounting concept that's generally based on the lower of an asset's cost or ma…
How The Price-to-Book (P/B) Ratio Works
- A price-to-book ratio can offer insight into whether an individual stock is a good buy, in relation to others in its industrial segment, or sometimes even the market overall. Focusing on fundamentals (the book value) vis-à-vis the share price, it can tune out speculative static that is currently distorting prices up or down. Comparing a single company's P/B ratio over time may help indicat…
A Low Price-to-Book (P/B) Ratio
A High Price-to-Book (P/B) Ratio
- Price-to-book value (P/B) is the ratio of the market value of a company's shares (share price) over its book value of equity. The book value of equity, in turn, is the value of a company's assets expressed on the balance sheet. The book value is defined as the difference between the book value of assets and the book value of liabilities. Investors ...
Criticisms of The Price-to-Book (P/B) Ratio
- A P/B ratio with lower values, particularly those below one, could be a signal to investors that a stock may be undervalued. In other words, the stock price is trading at a lower price relative to the value of the company's assets. Conversely, market participants might believe that the company's asset value is overstated. If the company has overvalued assets, investors would likely avoid th…
How to Calculate The Price-to-Book (P/B) Ratio
- A P/B ratio that's greater than one suggests that the stock price is trading at a premiumto the company's book value. For example, if a company has a price-to-book value of three, it means that its stock is trading at three times its book value. As a result, the stock price could be overvalued relative to its assets. A high share price versus asset value could also mean the company is earn…
Example of The Price-to-Book (P/B) Ratio
- Although the P/B ratio can help investors identify which companies might be overvalued or undervalued, the ratio has its limitations.