Those p/tbv numbers need context imo.
I see the argument that margin-of-safety exists, or possibly exists, when p/tbv is less than 1x.
But it's not obvious (to me anyway) what to make of the numbers by just looking at a company's p/tbv at 5x or 7x. Those numbers by themselves, tell me nothing.
I provide context thus:
FB p/tbv, 7x, is currently somewhat less than nine-year p/tbv median average(9.4x).
GOOG p/tbv (5x) is currently slightly less than 10-year p/tbv median average(5.3).
Ergo, FB and GOOG(L) are somewhat undervalued imo if based historically on p/tbv.
For several years I have posted here my estimate of what fair value GOOG might be trading at during the year. My calculation this year, again based on margins, is that GOOG should/could/might have a fair value and trade at 1200, just somewhat above current level. As I somewhat rely on this for buy decision, I wouldn't now add to my GOOG position with stock at 1115, but I don't expect I'll be selling now either. |
