OPEN-SOURCE SCRIPT
Fundamental Metric to Market
This script is supposed to be a quite basic way to find, from a fundamental standpoint, overvalue or undervalued stocks.
The script shows either Book to Market (inverse of P/B), EV /EBITDA, Earnings Yield (inverse of P/E) or Sales to Market (inverse of P/S).
For example, P/B is calculated as Close price / Book Value per share. As a contrarian investor you generally want to buy low P/B stocks and sell high P/B stocks. The problem is when a company has a negative Book Value. This might be the case when a company has written of a large amount of goodwill, which in turn wiped out their Book Value.
Instead you can use Book to Market, which is simply the inverse of P/B. It is calculated as Book Value per share / Close price. When using Book to Market you, generally, want to buy shares with high Book to Market values and sell those with low values. Because of the calculation, companies with negative Book Value will have negative Book to Market values and is therefore easy to identify.
The Fundamental Metric to Market indicator shows a colored background between the highest / lowest point of earlier values and the current value. When the background is mainly green the stock is probably undervalued, and the opposite is true when the background is red.
THIS IS NOT TRADING ADVICE, AND YOU SHOULD ALWAYS DO YOUR OWN RESEARCH
GOOD LUCK AND HAPPY TRADING
The script shows either Book to Market (inverse of P/B), EV /EBITDA, Earnings Yield (inverse of P/E) or Sales to Market (inverse of P/S).
For example, P/B is calculated as Close price / Book Value per share. As a contrarian investor you generally want to buy low P/B stocks and sell high P/B stocks. The problem is when a company has a negative Book Value. This might be the case when a company has written of a large amount of goodwill, which in turn wiped out their Book Value.
Instead you can use Book to Market, which is simply the inverse of P/B. It is calculated as Book Value per share / Close price. When using Book to Market you, generally, want to buy shares with high Book to Market values and sell those with low values. Because of the calculation, companies with negative Book Value will have negative Book to Market values and is therefore easy to identify.
The Fundamental Metric to Market indicator shows a colored background between the highest / lowest point of earlier values and the current value. When the background is mainly green the stock is probably undervalued, and the opposite is true when the background is red.
THIS IS NOT TRADING ADVICE, AND YOU SHOULD ALWAYS DO YOUR OWN RESEARCH
GOOD LUCK AND HAPPY TRADING
Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.