When a company trades for less than its book value, it could mean that the company is undervalued. Here are four companies with market capitalizations of more than $7 billion that can currently be bought for close to their book value.
1) Corning (GLW): Corning is the leading manufacturer of glass substrates used in products such as LCD screens. Its ultra-durable Gorilla Glass is used in a large portion of mobile devices, such as smartphones and tablets. The company's products also find their way into fiber-optic cables and automobiles. Corning currently has a market capitalization of about $20 billion, trading at $13.31 per share. I've written previously about Corning and believe it offers a good value. Corning has a current P/B ratio of 0.9 and a forward P/E ratio of 8.8.
2) Nokia (NOK): Nokia is one of the world's largest manufacturers of mobile devices. The future of Nokia hinges of the success of its new Windows phones, such as the recently released Lumia 900. Nokia and Microsoft (MSFT) have formed a partnership, and Microsoft has enough at stake with Windows Phone and enough resources that it's unlikely to let Nokia fail. Nokia currently has a market capitalization of $12 billion and trades at $3.20 per share. Nokia has a current P/B ratio of 0.8 and a forward P/E ratio of 29.5.
3) General Motors (GM): General Motors emerged from bankruptcy in 2009 with government aid and now controls a 19% share of the U.S. automobile market. The Treasury still owns a significant portion of GM, about 26%, and will have to sell that stake at some point in the future. General Motors is now a far more efficient company than pre-bankruptcy, but the auto industry is highly cyclical. GM currently has a market capitalization of $34.4 billion and is trading at $22 per share. GM has a current P/B of 1.2 and a forward P/E of 4.7.
4) Molsen Coors Brewing Company (TAP): Molsen Coors is one the largest brewers of beer in the world, with brands like Coors Lite, Miller Lite, Keystone, Blue Moon, and Leinenkugel's. Molsen has a 40% share of the Canadian beer market, a 29% share of the U.S. beer market, and 19% share of the UK beer market. Molsen Coors currently has a market capitalization of $7.5 billion and a share price of $41.32. The current P/B ratio is 1.0 with a forward P/E ratio of 10.5.
A company trading near its book value could be undervalued, but P/B is only one part of the valuation process.