Book Value Per Share (BVPS)

Book Value Per Share = (Shareholder’s Equity – Preference Stock)/Weighted Average Number of Shares Outstanding
Book Value Per Share indicates the level of safety associated with each common share after removing effects of liabilities. This ratio can also be used to see how much an investor can realize in the event of liquidation. This can also be compared with current stock price to decide about under/over valuation of the stock.

  • Look For– Increasing BVPS
  • Compare– With its past performance
  • Industry– All Industries
Particulars Vada Pav King (Rs.)
Shareholder’s Equity 60
Number of Shares Outstanding 1
Book Value Per Share 60/1 60

Let’s learn to choose better company in the same business by comparing their financials:

Particulars 2012 2013 2014
Kotak Mahindra Bank – BVPS 174 204 248

Book Value Per Share of Kotak Mahindra Bank is steadily increasing which shows good management performance.

Price to Book Value Ratio (PBR)

Price to Book Value Ratio = Current Share Price/Book Value Per Share
Price to Book Value Ratio is used to measure how many times of its book value, the stock is trading. This ratio can also be used for valuation and comparison purpose between companies with negative earnings.

  • Look For– Low PBR
  • Compare– With its past performance and within same industry
  • Industry– Asset based industries such banking & finance, capital goods, power, infrastructure
Particulars Vada Pav King (x)
Current Share Price 450
Book Value Per Share 60
Price to Book Value Ratio 450/60 7.5

Let’s learn to choose better company in the same business by comparing their financials:

Particulars Axis Bank Yes Bank
Price to Book Value Ratio 1.8 2.1

Both the companies mentioned above are engaged in banking. But Axis Bank is looking cheaper comparatively from valuation point of view.

Earning Yield (EY)

Earning Yield = Earning Per Share/Current Stock Price

Earning Yield measures the amount of profit a company has generated compared to its market capitalization. It also shows the percentage return an individual will get for investing in the share at current market price. It should also be compared to prevailing interest rates, such as yield of long term government bonds to determine whether it is over/under valued.

  • Look For– High EY
  • Compare– With its past performance
  • Industry– All Industries
Particulars Vada Pav King (%)
Earning Per Share 30
Current Stock Price 450
Earning Yield 30/450 6.66

Let’s learn to choose better company in the same business by comparing their financials:

Particulars BPCL HPCL
Earning Yield 7.95% 5.45%

Both the companies mentioned above are one of the major oil refining and marketing companies in India. Where BPCL has attractive earnings yield.

Dividend Yield (DY)

Dividend Yield = Dividend Per Share/Current Stock Price

Dividend Yield indicates how much a company pays out in dividends each year compared to its share price. In absence of any capital gains and in case of notional capital gains for long term investors, dividend yield is the realized return on investment for a stock.

  • Look For– High DY
  • Compare– With its past performance
  • Industry– All Industries
Particulars Vada Pav King (%)
Dividend Per Share 10
Current Stock Price 450
Dividend Yield 10/450 2.22

Let’s learn to choose better company in the same business by comparing their financials:

Particulars Coal India NMDC
Dividend Yield 7.9% 6.3%

Both the companies mentioned above are engaged in the business of mining. Where Coal India provides much attractive dividend yield.