For Immediate Release
Chicago, IL – January 22, 2025 – Stocks in this week’s article are — General Motors Co. GM, Integra LifeSciences IART, The Greenbrier Companies GBX, TPG RE Finance Trust TRTX and Enersys ENS.
5 Price-to-Book-Value Stocks with Great Prospects
Among the valuation metrics, price-to-earnings (P/E) and price-to-sales (P/S) are more commonly used for stock selection. This is because calculations based on earnings and, to some extent, sales are easy and handy. However, the price-to-book ratio (P/B ratio) has emerged as a convenient tool for identifying low-priced stocks with high-growth prospects.
The P/B ratio is used to calculate how much an investor needs to pay for each dollar of the book value of a stock. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share.
P/B ratio = market capitalization/book value of equity
The P/B ratio helps to identify low-priced stocks with high growth prospects. General Motors Co., Integra LifeSciences, The Greenbrier Companies, TPG RE Finance Trust and Enersys 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.
Here are five of the 11 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. GM has a projected 3-5-year EPS growth rate of 12.8%.
General Motors currently has a Zacks Rank #2 and a Value Score of A.
Headquartered in Plainsboro, NJ, Integra LifeSciences is one of the world leaders in regenerative medicine. The company develops, manufactures and markets cost-effective surgical implants and medical instruments. Integra LifeSciences currentlyhas a Zacks Rank #2 and a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
IART has a projected 3-5-year EPS growth rate of 12.0%.
Headquartered in Lake Oswego, OR, The Greenbrier Companies is a leading supplier of transportation equipment and services to the railroad and related industries. It also engages in complementary leasing and services activities.
The Greenbrier Companies has a Zacks Rank #1 and a Value Score of B at present. GBX has a projected 3-5-year EPS growth rate of 11.7%.
San Francisco-based TPG RE Finance Trust is a commercial real estate finance company. It focuses primarily on directly originating, acquiring and managing commercial mortgage loans and other commercial real estate-related debt instruments.
TPG RE Finance Trust presently has a Zacks Rank #2 and a Value Score of B. The company has a projected 3-5-year EPS growth rate of 33.2%.
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%.
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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/2400776/5-price-to-book-value-stocks-with-great-prospects
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Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpIntegra LifeSciences Holdings Corporation (IART) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
Greenbrier Companies, Inc. (The) (GBX) : Free Stock Analysis Report
Enersys (ENS) : Free Stock Analysis Report
TPG RE Finance Trust, Inc. (TRTX) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
