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Zacks.com featured highlights include General Motors, Park Hotels & Resorts, StoneCo, EnerSys and PayPal

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For Immediate Release

Chicago, IL – July 23, 2024 – Stocks in this week’s article are General Motors Co. (GM - Free Report) , Park Hotels & Resorts (PK - Free Report) , StoneCo (STNE - Free Report) , EnerSys (ENS - Free Report) and PayPal (PYPL - Free Report) .

5 Stocks with Attractive Price-to-Book Ratios Worth a Look

The price-to-book (P/B) ratio is widely favored by value investors for identifying low-priced stocks with exceptional returns. The ratio is used to compare a stock's market value/price to its book value.

The P/B ratio is calculated as below:

P/B ratio = market price per share/book value of equity per share

P/B ratio reflects how many times book value investors are ready to pay for a share. So, if the share price is $10 and the book value of equity is $5, investors are ready to pay two times the book value. Ideally, a P/B value under 1.0 is considered good as it indicates that the stock is potentially undervalued. However, value investors often consider stocks with a P/B value under 3.0.

The P/B ratio helps to identify low-priced stocks with high growth prospects. General Motors Co., Park Hotels & Resorts, StoneCo, EnerSys and PayPal are some such stocks.

Now, let us understand the concept of book value.

What is Book Value?

There are several ways by which book value can be defined. Book value is the total value that would be left over, according to the company's balance sheet, if it goes bankrupt immediately. In other words, this is what shareholders would theoretically receive if a company liquidates all its assets after paying off all its liabilities.

It is calculated by subtracting total liabilities from the total assets of a company. In most cases, this equates to common stockholders' equity on the balance sheet. However, depending on the company's balance sheet, intangible assets should also be subtracted from the total assets to determine book value.

Understanding P/B Ratio

By comparing the book value of equity to its market price, we get an idea of whether a company is under or overpriced. However, like P/E or P/S ratio, it is always better to compare P/B ratios within industries.

A P/B ratio of less than one means that the stock is trading at less than its book value or the stock is undervalued and, therefore, a good buy. Conversely, a stock with a ratio greater than one can be interpreted as being overvalued or relatively expensive.

For example, a stock with a P/B ratio of 2 means that we pay $2 for every $1 of book value. Thus, the higher the P/B, the more expensive the stock.

But there is a warning. A P/B ratio of less than one can also mean that the company is earning weak or even negative returns on its assets or that the assets are overstated, in which case the stock should be shunned because it may be destroying shareholder value. Conversely, the stock's price may be significantly high — thereby pushing the P/B ratio to more than one — in the likely case that it has become a takeover target, a good enough reason to own the stock.

Moreover, the P/B ratio is not without limitations. It is useful for businesses like finance, investments, insurance and banking or manufacturing companies with many liquid/tangible assets on the books. However, it can be misleading for firms with significant R&D expenditure, high debt, service companies, or those with negative earnings.

In any case, the ratio is not particularly relevant as a standalone number. One should analyze other ratios like P/E, P/S and debt to equity before arriving at a reasonable investment decision.

Here are five of the 11 stocks that qualified the screening:

Headquartered in Detroit, General Motors is one of the world's largest automakers. General Motors, along with its strategic partners, produces, sells and services cars, trucks and parts under four core brands — Chevrolet, Buick, GMC and Cadillac. General Motors assembles passenger cars, crossover vehicles, light trucks, sport utility vehicles, vans and other vehicles.

General Motors currently has a Zacks Rank #2 and a Value Score of A. You can see the complete list of today's Zacks #1 Rank stocks here.

General Motors has a projected 3-5-year EPS growth rate of 10.03%.

Mc Lean, VA-based Park Hotels & Resorts is a lodging real estate company. The company has a diverse portfolio of iconic and market-leading hotels and resorts in the United States and the international markets.

PK presently has a Zacks Rank #2 and a Value Score of A. The company has a projected 3-5-year EPS growth rate of 9.77%.

StoneCo provides financial technology solutions. The company offers an end-to-end cloud-based technology platform to conduct electronic commerce across in-store, online and mobile channels. StoneCo is based in Sao Paulo, Brazil.

STNE has a Zacks Rank #2 and a Value Score of A. STNE has a projected 3–5-year EPS growth rate of 26.51%.

EnerSys is a global leader in stored energy solutions for industrial applications. It sports a Zacks Rank #1.

ENS has a Value Score of A. EnerSys has a projected 3–5-year EPS growth rate of 18.0%.

PayPal is one of the largest online payment solutions providers, offering a smooth and secure transaction facility to customers and merchants.

PayPal has a Zacks Rank #1 and a Value Score of A at present. PYPL has a projected 3-5-year EPS growth rate of 14.79%.

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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2305823/5-stocks-with-attractive-price-to-book-ratio-worth-a-look

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine.  But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.

Strong Stocks that Should Be in the News

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