Hi,
moomoo ID:0
Log Out
English
Back
Download
Log in to access Online Inquiry
avatar
Moo Earnings
wrote a post10/14/2022 21:29
  Follow

Earnings Challenge E4｜Invest wiser with the P/B ratio in mind

Event Description:
Earnings Challenge E4｜Invest wiser with the P/B ratio in mind
This event is to help mooers learn more about the differences among companies and industries, review Fundamental Analysis indicators, and better navigate the market.
"Investing is not about beating others at their game. It's about controlling yourself at your own game. The intelligent investor is a realist who sells to optimists and buys from pessimists." —Benjamin Graham

Challenge Start >>
Rewards
1) 4,000 points: The first 200 users who give correct answers to Questions 1 and 2 will get an equal share of 4,000 points. (e.g., If 100 users win, each user will get 40 points.)
2) Cash Coupons: 3 users who give the best-quality comments will get USD 2 / SGD 2.8 cash coupons. (You can share investment idea, trading experience, and exploration of why Market Cap deviates among the companies.)
Questions
1. What companies do Company A, Company B, and Company C refer to respectively?
2. What's the ranking of Company A, B and C in terms of Market Capitalization?
Reference answer form: A>B>C or A<B<C or C<A≈B (within 10% deviation)
Tips: You can refer to the companies' P/B ratio information below.
Market capitalization = P/B ratio*Book value of assets.

Company A：
Earnings Challenge E4｜Invest wiser with the P/B ratio in mind
This company is an American multinational energy company headquartered in Houston. It specializes in the production of natural gas liquids and petrochemicals. In FY2021, it had total revenue of over $111billion. The current P/B ratio is about 1.9.
Company B：
Earnings Challenge E4｜Invest wiser with the P/B ratio in mind
This company was founded in 1920 as an integrated oil monopoly and is headquartered in Los Angeles. It produces, sells and transports petroleum, natural gas and other chemical products. Warren Buffett is loading up on it this year. The current P/B ratio is about 3.5.
Company C:
Earnings Challenge E4｜Invest wiser with the P/B ratio in mind
The company was founded in 1873 and is headquartered in London. It engages in the exploration, mining, and processing of mineral resources. Its name is Spanish, meaning yellow river. The current P/B ratio is about 1.8.
More Hint:
Earnings Challenge E4｜Invest wiser with the P/B ratio in mind
*Finding path: moomoo App → Markets→ Explore→ Stock Compare
How to Play?
Add the stock tickers (e.g., $Tesla(TSLA.US)$) to your answers, plus the Market Cap comparison and related investment ideas if you have any.
Event Period: October 14–October 20

Earnings Wiki:
All about the P/B ratio
Definition: The Price-to-Book ratio（P/B ratio）is a firm's stock price per share to its book value per share. The market value of equity is typically higher than the company's book value.
The P/B ratio measures the market's valuation of a company relative to its book value.
● Common Formula: P/B ratio = Market Price per Share/ [ (Total assets - Total liabilities) / Number of shares outstanding)]
If we change the formula side,
→ Phase one: Market Price per Share = P/B ratio*(Total assets - Total liabilities) / Number of shares outstanding)
If we multiply the shares in both sides,
→ Phase two: Market capitalization = P/B ratio*Book value of assets
Common Usage: Generally, the P/B ratio indicates whether investors pay too much for what would remain if the company went bankrupt. A lower P/B ratio could mean the stock is undervalued. Whereas, it could also mean something is wrong with the company.
The P/E ratio we talked about in E3 mainly applies to companies with stable returns. In contrast, the P/B ratio works better for companies with unstable earnings in cyclical industries, such as the oil, natural gas, and steel. That's because cyclical industries' profits are tied to resource prices or business cycles. Resource prices swing cyclically, and so does the profitability of the companies. But these firms generally have stable net assets values, making the P/B ratio a better indicator for this kind of corporate valuation.


Disclaimer:
This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content.
Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC). In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services Licence (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore.In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our websites https://www.futuau.com and https://www.moomoo.com/au. Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.
Moomoo is an app offered by Moomoo Technologies Inc. that provides information about investments. Moomoo Technologies is not an investment adviser or a broker-dealer and it provides neither investment or financial advice nor securities trading services. All contents such as comments and links posted or shared by users of the community are opinions of the respective authors only and do not reflect the opinions, views, or positions of Moomoo Technologies, its affiliates, or any employees of Moomoo Technologies or its affiliates. You are advised to consult a qualified financial or tax advisor for your personal financial planning and tax situations. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content.
188 Comments · 59K Views
Comment
Report
Comment
Sign in to post a comment

View more comments...