Focus Malaysia listed the stocks based on 2 major matrices
- Price-to-book ratio (PB) lower than 1
- Return on equity (ROE) higher than 10%
Companies use the price-to-book ratio to compare a firm’s market to book value by dividing price per share by book value per share (BVPS). An asset’s book value is equal to its carrying value on the balance sheet, and companies calculate it netting the asset against its accumulated depreciation. Book value is also the net asset value of a company calculated as total assets minus intangible assets (patents, goodwill) and liabilities.
Generally, a lower PB ratio indicates a counter is undervalued. However, a low PB ratio could also mean the stock is viewed unfavourably by investors for various reasons. Investors should therefore always evaluate stocks across several valuation methods
Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders’ equity. ROE is considered a measure of how effectively management is using a company’s assets to create profits. Using ROE to compare stocks can be helpful, but investors should be careful of comparison between stocks that are very dissimilar or with different dividend strategies.
Get ROE, PB ratio and along with other ratios calculated automatically using TRV Stock Analyzer.