Price to Economic Book Value (PEBV)

Metrics are only as good as the data that drive them. The best fundamental data in the world drives our metrics. Here’s proof from some of the most respected public & private institutions in the world.

The price-to-economic book value (PEBV) ratio measures the difference between the market's expectations for future profits and the no-growth value of the stock. Economic book value (EBV) is our measure of the no-growth value of a stock.

PEBV Formula:

Price per share/Economic book value per share = PEBV

When stock prices are much higher than EBVs, the market predicts the economic profitability (distinct from accounting profitability) of the company will meaningfully increase – resulting in a high PEBV. When stock prices are much lower than EBVs, the market predicts the economic profitability of the company will meaningfully decrease – resulting in a low PEBV. If the stock price equals the EBV, the market predicts the company's economic earnings will stay the same into perpetuity – resulting in a 1.0 PEBV.

EBV Formula:

(NOPAT / WACC)

- Adjusted total debt (including off-balance sheet debt)

+ Excess cash

+ Unconsolidated Subsidiary Assets

+ Net Assets from Discontinued operations

- Value of Outstanding Employee stock option liabilities

- Under (Over) funded Pensions

- Preferred stock

- Minority interests

+ Net deferred compensation assets

+ Net deferred tax assets

= Economic Book Value (EBV)

EBV per share = EBV / by shares outstanding

Want To Learn More?

Sign up to receive free alerts about all our new research reports including Long Ideas and Danger Zone picks.


Get Investment Research That Reads the Fine Print