Definition:

The 1-year Book Value per Share Growth Rate measures the percentage change in a company's book value per share over a one-year period. It reflects how effectively a company is increasing its net asset value on a per-share basis.

Formula:

((Book Value per Share at End of Year - Book Value per Share at Start of Year) / Book Value per Share at Start of Year) * 100

How to use the metric:

Investors use this metric to assess a company's ability to grow its net assets relative to its outstanding shares. A positive growth rate indicates that the company is increasing its asset base, which can be a sign of financial health and effective management.

Limitations:

This metric does not account for market conditions or external factors that may affect book value. It also does not consider changes in the number of shares outstanding, which can impact the growth rate. Additionally, it may not reflect the company's profitability or cash flow.

Applies to:

This metric works best in industries with significant tangible assets, such as manufacturing, utilities, and real estate, where book value is a relevant measure of company value.

Doesn't apply to:

It may not be as applicable to industries with high intangible assets, like technology or service sectors, where book value does not fully capture the company's value due to the importance of intellectual property and brand value.

Summary:

The 1-year Book Value per Share Growth Rate is a useful metric for evaluating a company's ability to grow its net asset value per share over time. While it provides insights into financial health, it should be used alongside other metrics to get a comprehensive view of a company's performance, especially in industries where intangible assets play a significant role.