Not exact matches
* Change in operating cash flow is replaced with: (i)
tangible book value per share
growth for companies in the Banks, Diversified Financials and Insurance sectors; and (ii)
growth in funds from operations for REITs, with the exception of Mortgage and Specialized REITs.
Finally, looking at valuation, European banks traded at a material discount to
tangible book value, one standard deviation3 below their historic forward price - earnings multiple, and near a 20 - year low relative to global banking peers as the year came to a close.4 We are also finding select financial sector
values in Asia, in both mature, under - earning banking markets like South Korea and Singapore, as well as underpenetrated,
growth - oriented markets like China (particularly in insurance) and India (particularly in banking).
In fact, at a 75 % discount to
growth on price - to -
tangible book value — two standard deviations below the average long - term level —
value hasn't been this cheap relative to
growth since the peak of the» dotcom» bubble.2 But, is this unpopularity permanent?
Buying stocks with a price less than or equal to two - thirds of the
tangible book value would have generated an average compounded
growth rate of 14.2 %.
Because of our conservative accounting,
tangible book value is a very good measure of the
growth of the
value of our company.
A more consistent measure of
value is our
tangible book value, which has had healthy
growth over time.
All measures like the
growth in
tangible book value per share become considerably more complicated to evaluate when a company grows via a series of mergers.
And, if I can be so radical, we begin ignoring earnings and focus on
growth tangible book value per share.
So, that's my preferred measure for how much has the underlying
value of the firm increased:
growth in fully diluted
tangible book value (ex-AOCI), adding back dividends, and subtract out net equity issuance / buyback measured not at cost, but at the current market price.
Growth in fully diluted
tangible book value (ex-AOCI) is a good measure of firm performance, if you add back dividends, and subtract out net equity issuance / buyback measured not at cost, but at the current market price.