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- 2011-7-11
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4#
发表于 2011-7-11 17:33
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P/B is just an easy way of showing a GENERAL valuation. For a company with a P/B of 1.5, all that is saying is that you are paying one and a half times the book value (value of all assets at historical cost and as audited by accountants, minus all liabilities, debt, preferred stock, etc.) for the stock (equity). There are assets that are not necessarily held at historical cost or purchase price, but that doesn't effect the idea behind P/B. If another company, same business model/industry etc. is trading at .65 P/B, in theory the .65 P/B company is relatively undervalued, assuming the company at 1.5 P/B is correctly valued. Hope that makes sense in general.
The main disadvantage of P/B is that it is very basic and broad. Take Google, or Coca-Cola, as an example. Both have relatively large P/B ratios. Does that mean they are overvalued? Not necessarily. The value of Google's computer codes/algorithms/etc., are intangible, and no accountant would ever OK assinging a value to them and classifying them as assets on the balance sheet. But they still have value. Googles P/B is around 4.5 or 4.6, and their market cap is $170B. So, their accounting book value (assets-liabilities) is roughly $40B (170B/4.6). The $130B in extra value that the market prices in is the markets' estimate of intangible asset values and PV of future cash flows. Coke is the similar, in that the value of their formula/marketing/brand is not a tangible asset, and left off of the balance sheet. The market recognizes that it has a lot of value though. Growth companies and companies that have a lot of intangible assets tend to have high P/B ratios. Toyota has a P/B around 1 now, partly because their assets are easily valued, and partly because their intangible brand has taken a hit recently. Companies with P/B below 1, may have assets worth less than their book value(outdated clothing inventory, inventory of Crocs, etc) or liabilities that are off balance sheet (leases, pensions, lawsuits pending, etc.) and the market prices that in.
Overall, any ratio that takes a market price of equity, and compares it to a static accounting value is going to have downsides. Generally though, they are a quick way to compare stocks with basic balance sheets.
Hope this helps a bit. Like all finance ideas, it's opaque and ambiguous. |
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