Definition:

The 1-year Tangible Book Value per Share Growth Rate measures the percentage change in a company's tangible book value per share over a one-year period. Tangible book value per share is calculated by subtracting intangible assets (like goodwill) from the total book value and dividing by the number of outstanding shares.

Formula:

((Tangible Book Value per Share at End of Year - Tangible Book Value per Share at Start of Year) / Tangible 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 tangible assets on a per-share basis over time. A positive growth rate indicates that the company is increasing its tangible book value, which can be a sign of financial health and effective management.

Limitations:

This metric does not account for intangible assets, which can be significant for companies in industries like technology or pharmaceuticals. It also does not consider market conditions or external factors that might affect the company's book value. Additionally, it may not reflect the company's overall profitability or cash flow situation.

Applies to:

This metric works best in industries with significant tangible assets, such as manufacturing, utilities, and real estate, where tangible book value is a more accurate reflection of the company's asset base.

Doesn't apply to:

It does not apply well to industries with high intangible assets, such as technology, pharmaceuticals, and media, because it ignores the value of intangible assets like intellectual property, patents, and brand value, which can be crucial for these sectors.

Summary:

The 1-year Tangible Book Value per Share Growth Rate is a useful metric for evaluating the growth of a company's tangible assets on a per-share basis over a year. While it provides insights into the company's asset management and financial health, it has limitations, particularly in industries where intangible assets play a significant role.