Yahoo Finance Zacks.com featured highlights include General Motors, Axis Capital, KT Corporation, Enersys and Paramount
For Immediate Release
Chicago, IL – September 26, 2024 – Stocks in this week’s article are General Motors Co. GM, Axis Capital Holdings AXS, KT Corporation KT, Enersys ENS and Paramount Group PGRE.
5 Low Price-to-Book Stocks that Value Investors Can Buy
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 the 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.
The P/B ratio helps to identify low-priced stocks with high growth prospects. General Motors Co., Axis Capital Holdings, KT Corporation, Enersys and Paramount Group are some such stocks.
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 all its liabilities.
It is calculated by subtracting total liabilities from the total assets of a company. In most cases, this equates to 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 book value.
Understanding P/B Ratio
By comparing the book value of equity to its market price, we get an idea of whether a company is under or overpriced. However, like P/E or P/S ratio, it is always better to compare P/B ratios within industries.
A P/B ratio of less than one means that the stock is trading at less than its book value or the stock is undervalued and, therefore, a good buy. Conversely, a stock with a ratio greater than one can be interpreted as being overvalued or relatively expensive.
For example, a stock with a P/B ratio of 2 means that we pay $2 for every $1 of book value. Thus, the higher the P/B, the more expensive the stock.
But there is a warning. A P/B ratio of less than one can also mean that the company is earning weak or even negative returns on its assets or that the assets are overstated, in which case the stock should be shunned because it may be destroying shareholder value. Conversely, the stock's price may be significantly high — thereby pushing the P/B ratio to more than one — in the likely case that it has become a takeover target, a good enough reason to own the stock.
Moreover, the P/B ratio is not without limitations. It is useful for businesses like finance, investments, insurance and banking or manufacturing companies with many liquid/tangible assets on the books. However, it can be misleading for firms with significant R&D expenditure, high debt, service companies, or those with negative earnings.
In any case, the ratio is not particularly relevant as a standalone number. One should analyze other ratios like P/E, P/S and debt to equity before arriving at a reasonable investment decision.
5 Low Price-to-Book Stocks
Here are five of the seven stocks that qualified the screening:
Headquartered in Detroit, General Motors is one of the world's largest automakers. General Motors, along with its strategic partners, produces, sells and services cars, trucks and parts under four core brands — Chevrolet, Buick, GMC and Cadillac. General Motors assembles passenger cars, crossover vehicles, light trucks, sport utility vehicles, vans and other vehicles.
General Motors currently has a Zacks Rank #2 and a Value Score of A. You can see the complete list of today's Zacks #1 Rank stocks here.
General Motors has a projected 3-5-year EPS growth rate of 8.6%.
AXIS Capital Holdings is the Bermuda-based holding company for the AXIS group of companies.The company provides a broad range of specialty insurance and reinsurance solutions to its clients on a worldwide basis through operating subsidiaries and branch networks based in Bermuda, the United States, Europe, Singapore, Canada, Latin America and the Middle East.
AXS presently has a Zacks Rank #2 and a Value Score of A. The company has a projected 3-5-year EPS growth rate of 27.8%.
Headquartered in Sungnam, South Korea, KT Corporation provides telecommunication services. Its services include mobile telecommunications services, telephone services, fixed-line and VoIP telephone services.It also provides interconnection services to other telecommunications companies, broadband Internet access services and other Internet-related services. It also offers information technology and network service.
KT has a Zacks Rank #1 and a Value Score of A. KT Corporation has a projected 3-5-year EPS growth rate of 11.3%.
Headquartered in Pennsylvania, EnerSys engages in manufacturing, marketing and distribution of various industrial batteries worldwide. It has a Zacks Rank #2 currently.
ENS has a Value Score of A. EnerSys has a projected 3-5-year EPS growth rate of 18.0%.
Paramount Group is a real estate investment trust focused on owning, operating and managing Class A office properties. It provides asset management, leasing, acquisitions, redevelopment and financing. Paramount Group has multiple U.S. headquarters, including one in New York City and another in Dallas-Ft. Worth.
Paramount Group has a Zacks Rank #2 and a Value Score of A at present. PGRE has a projected 3-5-year EPS growth rate of 26.1%.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2341544/5-low-price-to-book-stocks-that-value-investors-can-buy
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KT Corporation (KT) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
Enersys (ENS) : Free Stock Analysis Report
Paramount Group, Inc. (PGRE) : Free Stock Analysis Report
