2) Fundamental Analysis
You're eyeing BBRI stock but wondering -- is it expensive or cheap? One way to check is PBV. Think of it like comparing a house's selling price to the value of the land it sits on.
PBV (Price to Book Value) is a ratio comparing a stock's market price to the company's book value per share. Simply put, PBV shows whether the market values a company higher or lower than its net assets. A PBV below 1 means the stock price is cheaper than the company's net asset value.
PBV is like buying a used car. A 2020 Honda Jazz's official (book) value might be $18,000. If someone sells it for $20,000, the PBV is 1.1x (above book value). If sold for $15,000, the PBV is 0.83x (below book value). Stocks work the same -- some are priced above their 'contents,' some below.
Bank BCA (BBCA) typically trades at a PBV of 4-5x, meaning the market values BBCA at 4-5 times its book value. Why so expensive? Because BBCA is known for its best-in-class asset quality and consistent profitability. Meanwhile, smaller banks might trade at PBV of only 0.5-0.8x because their quality is perceived as lower.
After understanding this concept, apply it in tools so decisions become more objective and measurable.
Open Fair Value CalculatorWhat's an ideal PBV?
There's no single ideal number for all stocks. For banking, PBV of 1-2x is generally considered fair for mid-tier banks. But premium banks like BBCA can be fairly valued at PBV 4-5x due to far-above-average quality. Always compare with peers and historical data.
Why do some stocks have PBV below 1?
PBV below 1 means the market values the company below its net asset value. This could mean: (1) the stock is genuinely undervalued and has potential, or (2) there are serious issues making investors skeptical about its asset value. Deeper research is needed.
