If an investor wants to find out growth at a reasonable price then it is often advantageous to look at the price-to-book ratio. It is also called P/B ratio. The tool shows immediately which companies are overvalued or undervalued. A stock with a P/B ratio under 1.0 is said to be undervalued, while if this figure goes above 1.0 then it is overvalued. Three stocks with a low book value at the present moment are American International Group Inc (NYSE:AIG), Citigroup Inc (NYSE:C), and Goldcorp Inc. (USA) (NYSE:GG).
The first stock is American International Group Inc (NYSE:AIG), which closed last time at $64.14. Its P/B ratio is 0.80, which is lower than the average for its industry at 1.09. If one looks over the past five years, one will see that while sales went up by -4.50% a year that the net income for the company dipped by about 15.50% in rate.
As for Citigroup Inc (NYSE:C), it closed recently at a price of $58.42, after fluctuating over the last 52 weeks between $44.60 and $60.95. For the stock’s P/B ratio, it is 0.86, which is much lower than the industry average. The average for the industry is 2.67. Look over the past three months, the shares have boosted by roughly 8.08%.
The third stock with a low price-to-book value is Goldcorp Inc. (USA) (NYSE:GG). It has a current P/B ratio of 0.65, which is way under the 4.40 industry average. It closed at $13.07 a share in recent close. In the last five years, the earnings per share for the company has declined at a rate of approximately -33.64%, while the sales growth over the year has been steady at 4.80% a year.
Many investors seek out the P/B ratio as a simple way to evaluate companies. A stock with a low price means the market has neglected it.