The price to tangible book compares the price of a security to its hard, or tangible, book value as reported in the company's balance sheet. It is calculated as the Current Price divided by the latest quarterly Tangible Book Value Per Share. Tangible Book Value Per Share is defined as Common Equity less Intangibles divided by the Shares Outstanding at the end of the fiscal quarter.

The price to tangible book value is the share Price divided by the tangible book value per share. The TBVPS is calculated as follows: Common Equity less Intangibles divided by the Fully Diluted Shares Outstanding at the end of the period.

In theory, a stock's tangible book value per share represents the amount of money an investor would receive for each share if a company were to cease operations and liquidate all of its assets at the value recorded on the company's accounting books. As a rule of thumb, stocks that trade at higher price-to-tangible book value ratios have the potential to leave investors with greater share price losses than those that trade at lower ratios, since the tangible book value per share can reasonably be viewed as the lowest price at which a stock could trade.

Pr2TanBk is applicable mainly to financial and capital-intensive companies that own a relatively high proportion of hard assets and credit, as opposed to firms that engage in light manufacturing or service-oriented industries. For instance, Pr2TanBk is rather meaningless as a valuation measure in the technology sector, because much of a company's valuation derives from intellectual property, an intangible asset. An investor must also be careful with Pr2TanBk for companies that have long-held land: the land is stated at historical cost, not marked up each year on the balance sheet; and Pr2TanBk can result in a deceivingly high ratio.

Formula

Price / TanBVPS

Line Item Valuation Functions and Derived Factors 

These ratios combine line-item filing data with stock prices. The price used in the calculation depends on the period of the financials. The latest close price is used for ratios that involve the latest financials, like the most recent quarter or the latest trailing twelve fiscal months (TTM). For ratios that involve older financials, like the quarter one quarter ago, or the TTM one year ago, the price used for the calculation is the closing price from the first trading day following the period statement's announcement date.

Quarterly values from Income & Cashflow statements are annualized to make the resulting factor more readily comparable with 12-month factors. The annualization is done by multiplying the quarterly figures by approximately 4 (depends on the actual number of days in the period).

You can either use a prebuilt ratio or use the function to define your own.

Function

RatioName(offset,type)
offset: 0-24 (for interim) 0-19 (for annual)
type: QTR (for interim), ANN (for annual), TTM (for trailing twelve months)

For example to screen for stocks whose P/E today is less than their P/E from their previous fiscal 4 quarters enter:

PEExclXor(0,TTM) < PEExclXor(4,TTM)

The above can also be done using prebuilt ratios:

PEExclXorTTM < PEExclXorPTM

Prebuilt Ratios

Below are the available pre-built ratios with the corresponding parameters for the formula. Please note that availability varies by factor.

* AD+1: uses the closing price from the first trading day following the period statement's announcement date. For TTM, the AD is that of the latest quarter which is included in the TTM.

** PTM uses interim periods, so the offset is 4, not 1.

Click here for the Line-Item Reference Spreadsheet.