About

Book Value Per Share (BVPS) is a fundamental metric used by value investors to judge whether a stock is undervalued or overvalued. It theoretically represents the amount of money that would be paid to shareholders if the company were liquidated and all debts paid off today.

Benjamin Graham, the father of value investing, relied heavily on BVPS. If a stock trades below its BVPS (Price-to-Book ratio < 1.0), it may indicate a potential bargain, assuming the company's assets are valued correctly. This tool calculates BVPS and automatically derives the P/B ratio if the current share price is provided.

Formulas

The formula subtracts preferred equity because preferred shareholders have a higher claim on assets than common shareholders during liquidation.

BVPS = TotalEquity − PreferredEquityOutstandingShares

To find the Price-to-Book (P/B) ratio:

P/B = CurrentSharePriceBVPS

Reference Data

P/B Ratio	Interpretation	Typical Industries
< 1.0	Undervalued / Discount	Banks, Energy, distressed companies.
1.0 – 3.0	Fair Value / Standard	Manufacturing, Insurance, mature Retail.
> 3.0	Growth Premium	Technology, Biotech, Services (Low assets, high IP).
Very High (>10)	Speculative / Asset Light	SaaS companies, Brand-heavy firms (e.g., Nike).
Negative	Insolvent / Deficit	Companies with more liabilities than assets.

Frequently Asked Questions

Book Value is an accounting measure based on historical cost (Assets - Liabilities). Market Value is what investors are willing to pay today based on future growth expectations.

Preferred stock acts like a hybrid of debt and equity. In a liquidation event, preferred shareholders must be paid back before common shareholders, so that money does not belong to the common stock owner.

No. A stock trading below book value might be a 'value trap,' indicating that the market believes the company's assets are overstated or that the business is in decline.