Price to Economic Book Value (PEBV)
Metrics are only as good as the data that drive them. The best fundamental data in the world drives our metrics. Here’s proof from some of the most respected public & private institutions in the world.
The price-to-economic book value (PEBV) ratio measures the difference between the market's expectations for future profits and the no-growth value of the stock. Economic book value (EBV) is our measure of the no-growth value of a stock.
Price per share/Economic book value per share = PEBV
When stock prices are much higher than EBVs, the market predicts the economic profitability (distinct from accounting profitability) of the company will meaningfully increase – resulting in a high PEBV. When stock prices are much lower than EBVs, the market predicts the economic profitability of the company will meaningfully decrease – resulting in a low PEBV. If the stock price equals the EBV, the market predicts the company's economic earnings will stay the same into perpetuity – resulting in a 1.0 PEBV.
+ Net Assets from Discontinued operations
- Value of Outstanding Employee stock option liabilities
= Economic Book Value (EBV)
EBV per share = EBV / by shares outstanding
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