Consideration of the Price-To-Book Ratio or P/B ratio is important for many investors. They compare the current market price of a company to its book value. The point is to figure out the relative value of the stock, in relation to the industry average.
If the price-to-book ratio is a low one, in comparison to similar companies in the same industry, then the general consensus amongst investors is it is undervalued in relation to its share price. Three stocks with low P/B ratios currently are Stratasys, Ltd. (NASDAQ:SSYS), Companhia de Saneamento Basico (ADR) (NYSE:SBS), and BreitBurn Energy Partners L.P. (NASDAQ:BBEP) Stratasys, Ltd. (NASDAQ:SSYS) is the first stock to analyze. It has a P/B ratio of 0.92; that number is considerably lower than the industry average of 4.27. Looking back over the last five years, one can see it has a 6.70% sales growth per year (typically) and that the net income of the company has grown by about 30.90% (rate). At last close, it was at $31.34 per share.
Companhia de Saneamento Basico (ADR) (NYSE:SBS) has a price-to-book ratio of 0.65, which is much lower than the industry average (36.74). The sales growth of the company over the last five years has held steady at about 88.80% a year (approximately), with company earnings being up a bit with its rate of 92.50%. The last close price for this stock was $4.66 a share.
Regarding BreitBurn Energy Partners L.P. (NASDAQ:BBEP), its price thus far in 2015 is down about -2.40%. The share price was $3.05 as of last trade. Regarding the price-to-book ratio, it is currently at 0.45, which is the same as the industry average (identical at 0.45). Sales maintained at 80.40% per year (approx.), with the span being over the last five years. EPS has grown by a 15.905% rate.