Book Value / EPS ratio :
It may suggest Doubling time of stock: that means number of years is required to double it’s share price.
BE has 60-70% sensitivity.
If book value is less than current market price of a share in current scenario of bull market :
It means a Dying company. Avoid it.
PEG / PB/ PE ratio
- Lesser PEG is better
- Institutions and Smart Players use PE, PEG ratio to Entry and Exit from stocks
- Price to Book ratio is the value we pay for present Networth of company.
- PE, PB and PEG are valuation ratio which are used for Entry and Exit
- Book value= Networth / No of shares
Networth = Share Capital + Reserve
- When Nifty PE
<20: buy (Beg, borrow or steal to buy: Do not take it literally)
- Absolute values of PE, PB and PEG doesn’t tell anything. We must compare it with either same company or Industry. The best method is to compare with same company.