Unveiling the Stock Market "Health Checkup" Report: Per-Share Net Asset Value in English and Practical Stock Selection Tips

When selecting stocks, investors often encounter a question: what indicators should I look at? The answer may be hidden in the seemingly dull financial concept of “Net Asset Value per Share.”

What exactly does Net Asset Value per Share measure?

Net Asset Value per Share (NAVPS)—this English term reflects its essence: the actual asset value backing each share.

Simply put: if you compare a company to an enterprise, then the NAVPS is the amount remaining after the company pays off all debts, employee wages, and operating costs, distributed evenly across each share.

Expressed with a formula:

• NAVPS = (Total Assets - Total Liabilities) / Circulating Shares
• or = (Share Capital + Capital Surplus + Retained Earnings + Unappropriated Profits) / Circulating Shares

Example: If Uni-President’s assets are NT$2.5 billion, liabilities NT$1 billion, and circulating shares are 1 billion shares, then NAVPS = 1.5 NT$.

Is a higher NAVPS better? This is a common “trap”

Many novice investors get excited when they see a high NAVPS, but this is a misconception.

NAVPS has no direct correlation with stock price—this is key. Stock value is mainly determined by future profitability, while NAVPS only reflects the current asset situation. A company might have a high NAVPS but declining profitability; conversely, a tech company might have a low NAVPS but huge growth potential.

More importantly, changes in NAVPS do not equal improved operational performance. Issuing new shares can dilute NAVPS but doesn’t mean the company is worse; similarly, a company’s net worth declining due to losses isn’t the only signal for stock selection.

Take NVIDIA, Netflix, and Microsoft as examples: their NAVPS may not look outstanding, but because they possess strong intangible assets and profitability, they become long-term investment favorites.

Practical application: Price-to-Book Ratio (PBR) is the real stock-picking weapon

Rather than fixating on the absolute NAVPS, it’s more practical to understand the Price-to-Book Ratio (PBR).

Calculation formula: PBR = Stock Market Price / NAVPS

The judgment logic is simple:

• Lower PBR → Cheaper stock, possibly undervalued
• Higher PBR → More expensive stock, possibly overvalued

But here’s a key point: a low PBR doesn’t automatically mean it’s a good buy. If PBR is continuously decreasing, it might reflect a company in decline, not a buying opportunity. Also, PBR standards vary greatly across industries, so comparisons should be within the same industry for meaningful insights.

Cyclical stocks (shipping, steel, finance, etc.) are especially suitable for PBR screening because their profitability fluctuates significantly, and NAVPS better reflects their true value.

List of quality low-PBR companies in Taiwan and the US

Taiwan Stock Market:

• TSMC (2330): PBR about 4.29, global leader in wafer foundry
• Formosa Plastics (6505): PBR about 2.45, leader in petrochemical products
• Taiwan Mobile (3045): PBR about 3.29, telecom industry leader

US Stock Market:

• JPMorgan Chase (JPM): PBR about 1.94, global financial services giant
• Ford Motor (F): PBR about 1.19, value stock among traditional automakers
• General Electric (GE): PBR about 0.70, diversified industrial group

NAVPS vs. EPS: two perspectives for investment decisions

After understanding what the English name of NAVPS implies, it’s also important to recognize its “benchmark”—Earnings Per Share (EPS).

The fundamental difference:

• NAVPS focuses on asset reserves (past accumulated)
• EPS focuses on profitability (current performance)

A company might have abundant assets (high NAVPS), but these assets are inefficient, leading to poor EPS; conversely, a tech company with low assets might have excellent EPS but a relatively low NAVPS.

Stock selection strategies:

• For undervalued or defensive investments → focus on NAVPS
• For growth potential or aggressive investments → focus on EPS growth rate
• To evaluate market rationality → consider both indicators

How to efficiently check NAVPS?

Online channels: Stock information platforms like PlayStock, HiStock, and Financial Report Dog provide this data directly. Self-calculation: Log into listed company investor relations websites, download annual reports, and calculate using the formula.

Final advice

NAVPS is an entry point to understanding a company’s financial health, but it’s not the decisive factor. True stock-picking experts consider it alongside EPS, industry outlook, competitive position, and other factors.

Chasing high NAVPS blindly can cause you to miss fundamentally strong, high-growth opportunities. Conversely, using NAVPS as a risk management tool to identify stocks that are obviously undervalued or overvalued is the right approach.

Remember: Buying stocks is like choosing friends; it’s not about how much assets they currently have, but how much value they can create in the future.