The P/B Ratio or Price-To-Book Ratio is a figure that determines a stock’s market value in comparison to its book value. This formula uses the last closing price of the stock, and divides from it the last quarter’s book value per share. Investors use the ratio to figure out if they are overpaying or underpaying for a stock.
While it is somewhat crude, it can be used to find undervalued businesses. Here are three stocks currently with low P/B ratios: Helix Energy Solutions Group Inc (NYSE:HLX), Atlantic Power Corp (NYSE:AT), and Sibanye Gold Ltd (ADR) (NYSE:SBGL).
The first stock is Helix Energy Solutions Group Inc (NYSE:HLX), which closed at last trade at $7.92 per share. It has declined by over -4.12% so far in 2015. The P/B ratio for the company is 0.48, as compared to the industry average of 0.45. Over the previous five years, it has maintained sales at 11.00% per year, typically, with its EPS movement at about 2190% (growth rate).
Atlantic Power Corp (NYSE:AT) last closed at $2.15. It is below the industry average for its price-to-book ratio; the stock has a ratio of 0.46, while the average is 0.57. The net income for the company has gone down by, on average, -18.50% a year, with its sales growth at about 11.80%.
The third stock for consideration is Sibanye Gold Ltd (ADR) (NYSE:SBGL). Its P/B ratio is low, coming in at 0.90, while industry average is at 1.65, above the one-year lowest point of $8.90. The profit is up on average per year by 1.06% (as looked at over the past five years), with sales growth rising quickly over those same number of years at 188.30% a year. The long term trend has been down, which is since May 5 of this year, when it was 8.0901.