If an investor looks for overvalued or undervalued companies, this method is greatly helped by knowing the P/B ratios or price-per-book ratios of these companies. The relations between share price and book value is always an important consideration. An investor can look at this metric to determine where growth is happening at a respectable price point.
If a P/B ratio is under 1.0, it is generally thought the stock is undervalued; if that number goes above 1.0, then it is usually considered to be overvalued. Three stocks with low P/B ratios at the moment are Pier 1 Imports Inc (NYSE:PIR), Dicks Sporting Goods Inc (NYSE:DKS), and Plains All American Pipeline, L.P. (NYSE:PAA).
The first stock for analysis here is Pier 1 Imports Inc (NYSE:PIR). At last close, the price per share was $11.54. It kept its P/B ratio at 3.20, which is slightly under the industry average at 3.78. The full-year sales growth for the company, within the past five years, has stayed above 7.60% a year overall and the EPS for the company has lowered by a typical rate of -0.90%.
Dicks Sporting Goods Inc (NYSE:DKS) closed at $51.56. Its price-to-book ratio is 3.49; that number is lower than the average for the industry at 3.57. As for the past five years, the company’s sales are up 9.10% a year, typically, with the net income for the company increasing by a 190.80% rate, on average.
Plains All American Pipeline, L.P. (NYSE:PAA) has closed at $40.20 recently. Its P/B ratio is at 1.90; that number is vastly under the 20.22 industry average. Over the past 52 weeks, the stock price has hovered between $38.56 and $61.09. Its consensus price target per share is about $10.80. Its year high was back on February 25, when it rose to 52.7, while the yearly low so far was on August 6, when it was at 32.53.