Zacks.com Featured Highlights Include: MetLife, Echo Global, Gulfport, Barclays And CAI
Zacks Investment Research | Dec 05, 2018 10:07PM ET
For Immediate Release
Chicago, IL – December 6, 2018 - Stocks in this week’s article are MetLife, Inc. (NYSE:MET) , Echo Global Logistics, Inc. (NASDAQ:ECHO) , Gulfport Energy Corp. (NASDAQ:GPOR) , Barclays (LON:BARC) PLC (NYSE:BCS) and CAI International, Inc. (NYSE:CAI) .
Low Price-to-Book Value Stocks to Buy in December
The price-to-book (P/B) ratio is widely favored by value investors for identifying low-priced stocks with exceptional returns. The ratio is used to compare a stock’s market value/price to its book value.
The P/B ratio is calculated as below:
P/B ratio = market price per share/book value of equity per share
P/B ratio reflects how many times book value investors are ready to pay for a share. So if the share price is $10 and book value of equity is $5, investors are ready to pay two times the book value. Ideally, a P/B value under 1.0 is considered good, indicating a potentially undervalued stock. However, value investors often consider stocks with a P/B value under 3.0.
Now let us understand the concept of book value.
What is Book Value?
There are several ways by which book value can be defined. Book value is the total value that would be left over, according to the company’s balance sheet, if it goes bankrupt immediately. In other words, this is what shareholders would theoretically receive if a company liquidates all its assets after paying off its liabilities.
It is calculated by subtracting total liabilities from the total assets of a company. In most cases, this equates to the common stockholders’ equity on the balance sheet. However, depending on the company’s balance sheet, intangible assets should also be subtracted from the total assets to determine the book value.
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