Columns W – Y – Net Equity per Share

Cameron : Well Column W is just the share price again, so next we’re looking at column X. Which asks what the net equity per share (NEPS) is, also known as the book value. Is that right, Tony?

Tony : Yeah. Sometimes it’s also called net tangible assets per share, but we call it book value or NEPS.

Cameron : So this is another calculation cell. Basically, I’m taking the net equity figure that we just came up with and dividing it by the share price. And this is again, is telling me how much equity I’m actually getting for every dollar I spend.

Tony : Yes, correct. So ideally you want to pay a dollar for a dollar equity per share but no more than 30% above net equity per share.

SHARE PRICE LESS THAN THE NEPS

Cameron : So this comes in the next column. Column Y asks the question is the share price less than the NEPS. It’s a score cell. So, it gets one for a yes. Blank for a no. Why blank for a no, Tony?

Tony : Well, again, it’s one of these boost things because plenty of companies won’t be trading at their net equity per share value. It’s a fairly rare occurrence, but if they are, it’s a thing we want to give an extra score on the checklist for.

Cameron : But we don’t want to penalize them if they’re not.

Tony : No, that’s right. Otherwise, you’re penalizing most of the market.