Book value per share vs current market price of share

POSTED BY Amit Kumar Singh ON January 11, 2011 6:41 pm COMMENTS (4)

Is it value investing in stocks with its book value close to or greater than its current market price ? ( obviously if, fundamental of company is good )

4 replies on this article “Book value per share vs current market price of share”

  1. Ramesh says:

    It is a complicated procedure with lot of assumptions and really a specialist’s job.
    Surely, it is not simply a matter of looking at the book value, the share price and declare wow, that share is trading at a discount from its book value and hence it is a sure buy!!

    Ramesh

  2. Amit Kumar Singh says:

    @Ramesh
    How can we calculate the intrinsic value of a stock? Please share your knowledge with one example.

  3. Amit Kumar Singh says:

    @Ramesh
    How can we calculate the intrinsic value of a share? Please share your knowledge with one example.

  4. Ramesh says:

    Nope.

    Book value is a complicated and sometimes quite erroneous value. Same with P/E.

    Known factors including book value, earnings, etc are already factored in the price of a stock.

    Value-investing = investing in companies which are trading at a price which is quite less (=margin of safety) than the Intrinsic Value.

    This intrinsic value is not equal to the book value!! Though, book value is a part of the intrinsic value.
    Hope this explains.
    Ramesh

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