Comments on: Market Cap vs Enterprise Value vs Share Price vs Value

By: Fadi

Fadi — Wed, 04 Aug 2010 15:04:24 +0000

Thanks Dean,

Another reason is the book value per share, which is $4.90. It is very rare to have a book value more than the stock price, this is a sign that the company might be bought in a takeover bid.

The stock now is hovering around the $4.20 level, 70 cents below the book value, I don’t know how much longer will it take for this stock to get noticed.

By: Dean Morel

Dean Morel — Tue, 03 Aug 2010 23:21:01 +0000

Fadi, there is no one indicator that can either tell you whether a stock is a great buy. Analysis is like a mystery puzzle and each indicator is but one clue. There are scores of companies with an EV greater than market cap and many reasons for this. Cash burning companies and poor quality assets are two reasons. In the case of BIOS the majority of the asserts are goodwill, http://finance.yahoo.com/q/bs?s=BIOS. Can they create value from that goodwill? You need to dig deeper.
Do you have other reasons to think it is a great buy?
Latest earnings transcript.

By: Fadi

Fadi — Tue, 03 Aug 2010 20:09:57 +0000

I’m looking at BIOS ( http://finance.yahoo.com/q/ks?s=bios ), the Market Cap is almost half the EV at the current ridiculous price of $4.17. Does this mean that it’s a great stock to buy?

By: Dean Morel

Dean Morel — Tue, 01 Sep 2009 06:29:24 +0000

I believe the embedded value per share is a metric used by life insurance companies to reflect future shareholders profits. As such, the share price can be lower than it for the usual reasons why share prices are less than the underlying value. I don’t invest in life insurance companies so am not familiar with that metric.
The share price and underlying value are completely distinct things and are rarely the same. The share price can be lower due to future expectations.

By: vanessa

vanessa — Mon, 31 Aug 2009 11:10:23 +0000

I have a question.
Why is can the EMBEDDED VALUE PER SHARE BE HIGHER THAN THE SHARE PRICE.