Price to Book Ratio Review of Five Financial Giants – BAC, C, JPM, WFC, MS

 By: on Jul 19,2012 Posted in Finance ,Investment Ideas
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The price to book ratio is used to compare a stock’s market value to its book value. The ratio is calculated by dividing the present ending price of the company by the previous quarter’s book value per share.

The lower value in the price to book ratio could mean that the stock is undervalued. Though, it could also show that something is wrong with the corporation. This ratio varies by industry as like most other ratios.

Many investors observe this ratio for valuation purposes. In this article we will examine some financial giants.

Bank of America Corp (NYSE:BAC) has the market capitalization of 81.15 billion. The company has P/B ratio of 0.38 while price to cash ratio is 0.63. Institutional ownership of the stock is 53% while 10.78 billion shares are outstanding. The net profit margin is 0.06% while its operating profit margin is -2.58%.

Citigroup Inc (NYSE:C) has 63% institutional ownership while its price to earnings ratio is 7.85. The company has 2.93 billion shares outstanding while market capitalization of the company is 79.47 billion. PEG ratio of Citigroup is 0.88 while price to book ratio is 0.44.

JPMorgan Chase & Co (NYSE:JPM), the biggest U.S. lender, has a market capitalization of 132.74 billion while its price to book ratio is 0.69. The company offered earnings per share of 4.44 and it has 3.80 billion outstanding shares. The net profit margin of the company was 19.48% while its operating profit margin was 26.78%.

Wells Fargo & Company (NYSE:WFC) offered $0.88 dividend while its EPS is 3.03. The stock has market capitalization of 179.16 billion while its institutional ownership is 78%. The company has 1.21 price to book ratio. Shares of the company are moving ahead of its 50 day simple moving average by 5.07% while ahead of the SMA 20 by 2.64%.

Morgan Stanley (NYSE:MS) has market capitalization of 27.67 billion and its P/B ratio is 0.44. The company has the institutional ownership of 61% and the Beta, which is used as a measure of a stock’s volatility in relation to the market, is 1.61. The PEG ratio of the bank is 1.46 and P/E ratio is 21.52. The debt to equity ratio is 3.01 while long term debt to equity ratio is 2.84%.

In conclusion we can see that all the five financial giants have strong price to book ratios as compared to other firms in the industry, with the exception of Wells Fargo.




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