Frequently Asked Questions
Book Price (Price-to-Book Multiple Valuation)
The Book Price is a multiple valuation that focuses on a company's average historical price-to-book ratio (P/B). This valuation is very straightforward. First, the historical P/B is calculated by taking the average P/B over the past 10 years. This number is then multiplied by the current Book Value (Total Stockholders' Equity) of the company and divided by the number of shares outstanding to arrive at the Book Price. This value is the price this stock should be traded at currently to achieve the same average P/B that the company has maintained over the past 10 years.
Vuru focuses primarily on the Book Price for financial stocks, where Growth Price and Stability Price calculations do not work. The Book Price of a stock is a good high level valuation, however keep in mind that it relies solely on a historical ratio of price to Book Value, and the past is not always an accurate indication of the future.