Book value per share divides total shareholders' equity by shares outstanding. It's the accounting net worth of the business — assets minus liabilities — spread across each share. It's the denominator behind the P/B ratio, and most meaningful for asset-heavy businesses like banks and insurers where the balance sheet closely tracks intrinsic value.
The formula
Shareholders' EquityShares Outstanding
= Book Value per Share
Why it matters
- —It's the anchor for the P/B ratio — a stock trading below its book value per share is, on paper, priced below its net accounting worth.
- —Understates the real value of asset-light businesses, where brand, IP, and customer relationships create value the balance sheet doesn't capture.
- —Can be inflated by goodwill from past acquisitions — tangible book value (excluding goodwill) gives a stricter read.
How to read it
| Price < BVPS | Trading below accounting net worth — potentially undervalued, or a warning sign |
| Price ≈ BVPS | Priced near net asset value |
| Price >> BVPS | Market values intangibles, growth, or brand well above the balance sheet |