Using the pricetobook ratio to value bank stocks the. Bank of americas tangible book value per share for the quarter that ended in jun. It is still down over 37% from its highs despite having bounced more than 30% from its. One of the best bank stocks to buy on the 2020 coronavirus dip is bank of america.
This may underestimate the true economic values of the assets. View price to tangible book value for bac access over 100 stock metrics like beta, evebitda, pe10, free cash flow yield, kz index and cash conversion cycle. Looking at it that way, wells fargo is actually the most expensive of the four at 2. More improvements harder to come by at bank of america. Buying low price to tangible book value stocks is still an ou. You may have to scroll the table to see all the data. Book value is defined as total assets minus liabilities, preferred stocks, and intangible assets. Find out all the key statistics for bank of america corporation bac, including valuation measures, fiscal year financial statistics, trading record, share statistics and more. Aug 12, 2017 book value per share is an accounting measure based on historical transactions.
Apr 05, 2016 the price to book ratio has performed poorly since 2000. Bac stock is trading at a low priceearnings ratio of 7. A tangible thing is something that can be touched, that can be palpated. If its not happening nowif the business isnt booming now, growing now, making a huge profit now, its not of value to us. How to calculate the book value of a company sapling. Bacs credit card division, according to the companys 2006 10k, returned an unbelievable 3. Tangible book value per share is calculated as the total tangible equity divided by. Tangible book value, also known as net tangible equity, measures a firms net asset value excluding the intangible assets and goodwill. Bac stock is one of the best bank stocks you can buy to get a reliable, growing dividend and a solid company. And while it might seem like the bac stock price almost by definition would be too cheap at 1x book, thats not how trading necessarily has played out.
Book value per share is a good measure to value bank stocks. Considering bacs rather low returns on average tangible common equity rotce 6. The rat race of life is a perfect example of this tangible quality enthralls us. Companys current price to tangible book ratio has decreased due to shareprice contraction of 30. Book value can refer to several ways to analyze a business, but when it comes to bank stocks, the book value pertains to the net asset value of the company.
Price book value is a widely used stock evaluation measure. Price to tangible book value backtest fat pitch financials. Bank of america corporation common stock bac stock. Bac bank of america corporation common stock nasdaq. Usually a companys book value and tangible book per share may not reflect its true value. Hence, bank of america corporations priceto book ratio for the period was 1. Book value per share tells investors what a banks, or any stocks, book value is on a pershare basis. To calculate the tangible book value per share, malcolm finds that the firms number of shares outstanding is 2,000,000 million. The assets may be carried on the balance sheets at the original cost minus depreciation.
Bank of america corporation price to tangible book ratio. Bac stock is one of the best bank stocks you can buy. Bank of america corporation bac valuation measures. In this scenario, the socalled pricetobook pb ratio is applied with a banks stock price compared to equity book value per share. Bank dividends and book values to come under deep scrutiny. The price to book ratio or pb is calculated as market capitalization divided by its book value.
More improvements harder to come by at bank of america we are maintaining our per share fair value estimate of the narrowmoat firm. Hence, bank of americas price to tangible book ratio of today is 1. Quarter and due to tangible book value contraction of 0. Here, we take the book value of a company and subtract the intangible asset value, counting them for nothing. Tangible book value is calculated by subtracting intangible assets intellectual property, patents, goodwill etc. How to figure the book value of bank stock finance zacks. By dividing book value by the total number of shares outstanding, you can find book value. In depth view into bank of america pricetotangiblebook explanation, calculation, historical data and more. Will bank of america stock dip below book value now. Companys current price to tangible book ratio has decreased due to shareprice contraction of 42. In depth view into bank of america priceto tangible book explanation, calculation, historical data and more.
Total tangible equity is calculated as the total stockholders equity minus preferred stock minus intangible assets. The price to book ratio has performed poorly since 2000. You can also determine the book value per share once you know the book value and shares outstanding. Using the pricetobook ratio to value bank stocks when it comes to evaluating bank stocks, the pe ratio doesnt tell you the whole story. You can find these figures on the companys balance sheet. Tbv is frequently used to illustrate how much of a company is left after a bankruptcy filing. To calculate the book value of a company, subtract the dollar value of the companys preferred stock from its shareholders equity. These bargain bank stocks may emerge from the coronavirus.
View tangible book value per share for bac access over 100 stock metrics like beta, evebitda, pe10, free cash flow yield, kz index and cash conversion cycle. Find the latest price book value for bank of america corporation bac bank of america corporation bac price book value zacks. Applying the 20002015 regression of price tangible book value per dollar of rotce to our pro forma upside estimates and. Bank of america bac has recessionproof book value, says. Warren buffett states in every annual shareholder letter that he writes the book value of berkshire hathaway as a way of keeping score. If youre behind a web filter, please make sure that the. The price to tangible book value ptbv is a valuation ratio expressing the price of a security compared to its hard, or tangible, book value as. One reason for this is wells fargo is relatively less focused on trading activities than its peers, potentially reducing its risk exposures. When pro forma net tangible book value per share is adjusted for the additional 3. Moreover, the average excess returns from 2001 to 2011 for the top quintile for price to tangible book value 5.
This goes one step further and removes the long term assets from the net tangible book value. Fundamental analysis data for bank of america corp bac, including priceearnings ratios and earnings per share, at ally invest. To arrive at this number, subtract liabilities from assets. The pricetotangiblebook valuations have declined for all except for cit group cit. And while it might seem like the bac stock price almost by definition would be too cheap at 1x book. Computed by deducting intangible assets, startup expenses, and deferred financing costs from the firms normal book value bv. Historical price to book ratio values for bank of america bac over the last 10 years. Heres how investors should value bank of americas stock. If youre behind a web filter, please make sure that the domains.
If youre seeing this message, it means were having trouble loading external resources on our website. And while it might seem like the bac stock price almost by. Citigroup inc price to tangible book ratio ptb ratios. How may one determine reasonable fair value estimates for banking stocks. Jpm and bank of america bac trade above tangible book, which is a hard.
Theoretically, ptbv represents the amount of money that shareholders would receive for each share owned if the company were to liquidate its operations. Third, there is a greater chance that bac could become an eventdriven stock given lousy efficiency, a stock price at 20% below estimated 4q16. If a company is still undervalued, than it is most likely a great buy. In other words, its how much all of the physical assets of a company are worth. Quarter and due to tangible book value contraction of 1. The current price to book ratio for bank of america as of october 21, 2019 is 1. The results are similar to those for the pb ratio backtest the top quintile once again clearly outperformed the market by a significant margin.
His thoughts on the importance of book value versus intrinsic value were laid out in his berkshire 1993 letter. Oct 27, 2019 the price to tangible book value ptbv is a valuation ratio expressing the price of a security compared to its hard, or tangible, book value as reported in the companys balance sheet. Book value reveals how much the company is worth if it were liquidated and all assets were sold for cash. Mar 23, 2012 the results are similar to those for the pb ratio backtest the top quintile once again clearly outperformed the market by a significant margin. Tangible book value tbv is calculated by subtracting intangible assets from the companys book value. We can improve the pb ratio by switching the denominator to tangible book value. For instance, if a company filed bankruptcy with five million in current assets, three million in gross property, plant. The current price to book ratio for bank of america as of may 08, 2020 is 0. Big difference in those values that you really wouldnt see just by looking at the price. Book value per share is an accounting measure based on historical transactions. Bank of america corporation price to tangible book ratio ptb.