Say I have a stock which has
Assets: 20 000 000
Liabilities: 5 000 000
So if the company folded it would have 15 000 000
Now say the company has 50 000 000 shares outstanding
That would be a value of 30c per share.
Say the share is trading at 70c
You would say that the share at current price is overvalued and not a good buy.
Is this how the fund managers do their fundamental analysis when considering to buy shares.
Is this really important in a market which is based on sentiment and raw emotion?