XXX traded at a X per cent discount to NTA

shannonwhitty said:

Hi,

Trying to dip my toes in the market and I keep coming across terms that I just don't understand.

I know NTA = Net Tangible Assets but what does this phrase actually mean?

To trade at a X% discount to NTA?

Thanks

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skc said:

NTA is an accounting book entry. It is usually expressed on a per share basis.

To trade at X% discount (or premium) to NTA means the market price of the stock is different to this book value.

A discount indicates that the market believes (either rightly or wrongly) that the assets on the balance sheet are actually worth less than what the number indicates. The converse is true if the share price is higher than the NTA.

NTA is more meaningful for some sectors (e.g. property trusts) than others (e.g. IT companies).

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shannonwhitty said:

Thanks for that - In this case, the stock is trading at a 6% discount to NTA - If I understand, this means that the market share price is 6% below the NTA, which means the business is more valuable (book value) than the share market suggests?

Click to expand...

shannonwhitty said:

Thanks for that - In this case, the stock is trading at a 6% discount to NTA - If I understand, this means that the market share price is 6% below the NTA, which means the business is more valuable (book value) than the share market suggests?

Click to expand...