Book Value per Share (BVPS)

What is BVPS?

BVPS, or Book Value Per Share, is a financial metric that represents the book value of each share of a company. It is calculated by dividing the company's net equity value by the number of outstanding shares.

What does BVPS represent?

BVPS represents the portion of the company's net equity assigned to each share. It reflects the value each shareholder would be entitled to if the company were to be liquidated and all assets were sold at book value.

Similar to Earnings Per Share (EPS), BVPS should not be used in isolation, as its absolute value alone is insufficient to determine if a share is cheap or not. When used in conjunction with EPS, we can arrive at the fair share price through Graham's Number.

How is BVPS calculated?

BVPS is calculated by dividing the company's net equity value by the total shares outstanding. The formula is as follows:

Loading...

For example, if the company SGAZ has a net equity value of $60,000 and 10,000 outstading shares, the BVPS would be $60,000 / 10,000 = $6.

The net equity value can be found in the company's balance sheet, while the number of outstanding shares can be obtained from the company's documents or financial websites.

BVPS is an important metric for investors who want to assess the book value of a company and compare it to the market price of the share. However, it is essential to analyze other valuation indicators and information about the company to make informed investment decisions.

Example

AAPL:

Apple Inc. is one of the world's leading technology companies.

Its net equity value in the 2Q2023 financial report was $60.274 billion, and it had a total of 15.775 billion outstanding shares (considering shares in free circulation, treasury shares, those held by the controllers, etc.). Thus, we can easily calculate the BVPS:

Loading...Loading...

This means that each share of Apple represented $3.82 of net equity in that quarter.