Using the Price/Book Ratio is a classic way to identify potentially mispriced stocks. The ratio is calculated by dividing the current stock price by the book value per share. If the P/BV Ratio is less than 1 it is said to be trading below its “Break Up” value. A low ratio number could indicate a potential opportunity or warning that something is fundamentally wrong with the company.
Earnings Per Share Growth (1-Fiscal Year) provides a more stable picture of earnings growth over time. As well, it helps indentify companies whose profitability is increasing or decreasing. EPS is generally a key driver for a company’s share price.
We ran a screen for companies with a Price/Book Value of less than 1 that have underperformed the S&P 500 (SPY) in the last week. From this narrowed pool we then screened for companies that had grown their EPS over the last fiscal year (X>10%).
The Price/Book Value Ratio ranks the list from highest lowest:
1. International Speedway Corporation (ISCA)
Sector | Consumer Cycle |
Industry | Leisure |
Market Cap | $1,053M |
Beta | 1.14 |
The company is the lead promoter of motor sport entertainment. The P/BV Ratio is 0.88. In the last week ISCA declined -2.60%. The EPS Growth Rate is 707.14%. The short interest is N/A as of 08/15/2011.
2. United Microelectronics Corp. (UMC)
Sector | Technology |
Industry | Semiconductors |
Market Cap | $4,736M |
Beta | 1.10 |
The company develops and sells semiconductors. The P/BV Ratio is 0.63. In the last week UMC declined -2.58%. The EPS Growth Rate is 523.33%. The short interest is N/A as of 08/15/2011.
3. Trina Solar Limited (TSL)
Sector | Technology |
Industry | Solar |
Market Cap | $827M |
Beta | 2.99 |
The company offers integrated solar-power products that are manufactured in China. The P/BV Ratio is 0.67. In the last week TSL declined -22.26%. The EPS Growth Rate is 433.33%. The short interest is N/A as of 08/15/2011.
4. RailAmerica Inc. (RA)
Sector | Industrials |
Industry | Railroads |
Market Cap | $641M |
Beta | N/A |
The firm's P/BV Ratio is 0.94. In the last week RA declined -3.38%. The EPS Growth Rate is 400.00%. The short interest is 6.60% as of 08/15/2011.
5. Southwest Airlines Co (LUV)
Sector | Industrials |
Industry | Airlines |
Market Cap | $6,480M |
Beta | 1.38 |
The company is a low-fare airline operator. The P/BV Ratio is 0.90. In the last week LUV declined -2.30%. The EPS Growth Rate is 369.23%. The short interest is 3.40% as of 08/15/2011.
6. SunPower Corporation (SPWRA)
Sector | Technology |
Industry | Solar |
Market Cap | $1,182M |
Beta | 1.87 |
The company develops and sells solar electric power products. The P/BV Ratio is 0.79. In the last week SPWRA declined -7.44%. The EPS Growth Rate is 368.57%. The short interest is N/A as of 08/15/2011.
7. Healthways, Inc. (HWAY)
Sector | Healthcare |
Industry | Medical Care |
Market Cap | $384M |
Beta | 1.59 |
The company offers specialized Health and Care Support programs and services. The P/BV Ratio is 0.87. In the last week HWAY declined -2.90%. The EPS Growth Rate is 353.33%. The short interest is 8.80% as of 08/15/2011.
8. Brookfield Office Properties (BPO)
Sector | Real Estate |
Industry | Real Estate Services |
Market Cap | $7,980M |
Beta | 1.97 |
The company develops and manages commercial properties all over North America. The P/BV Ratio is 0.91. In the last week BPO declined -3.53%. The EPS Growth Rate is 343.86%. The short interest is N/A as of 08/15/2011.
9. Assured Guaranty Ltd (AGO)
Sector | Financial Services |
Industry | Insurance - Specialty |
Market Cap | $2,091M |
Beta | 2.53 |
The P/BV Ratio is 0.53. In the last week AGO declined -10.35%. The EPS Growth Rate is 286.67%. The short interest is 4.70% as of 08/15/2011.
10. Brown Shoe Company, Inc. (BWS)
Sector | Consumer Cyclical |
Industry | Footwear & Accessories |
Market Cap | $296M |
Beta | 2.20 |
The company operates retail shore stores. The P/BV Ratio is 0.76. In the last week BWS declined -4.99%. The EPS Growth Rate is 286.36%. The short interest is 23.70% as of 08/15/2011. Given the high short interest this could be a short favorite or potentially a great short squeeze.
We hope this list helps as investors due their own due diligence on companies trading below Price/Book Value and growing their Earnings Per Share.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
