It is very important for you to know how to calculate price per share of a stock, especially if you are investing or you have invested in any stock. The price per share can be computed by using many methods. Several methods are used by stock analyst to compute price per share of several stocks by using similar techniques for many organizations in the same industry. In this article, we will tell you how to calculate price per share in simple steps.

**Steps for calculation**

- At first, you have to find out the stock quotations from the newspapers or online (you can find them on several business websites). You should always try the closest price if it is given there after exchange hours or after the last quote in trading during the financial day.
- For better understanding, it is suggested to consult a journal, like Wall Street Journal or Value Line Investment Survey to find out the book value. Now you should compare the book value with the historical P / E and the 3 to 5 year price protrusion. This represents the expected range within which the stock is to be traded and which will show whether the stock is trading high or low of its long term price.
- You should multiply the stock price by the number of outstanding shares. This figure, you have found, is the capitalization of the organization. You have to ignore stock options to employees and distribute the share price by the income per share. This figure is the multiple of the share or a symbol of the expected future income of the organization. Now you have to estimate the income of next year and multiply it by the multiple you have found earlier, to obtain price estimation of next year. Now you have to use this figure for financial organization.
- You have to multiply the earnings of a company by its historical multiple that is that multiple which is calculated by multiplying 100 by the expected growth increase of earnings of next year. Let us assume a share income is $ 1 in the present year and is expected to earn $ 1.30 in the next year which has a 30 % growth rate and has a multiple of 30. Now if the share is of $ 20 in the present year then the share price will be at $ 39 in the next year with a profit of almost 100 %.
- For capital intensive shares, you should deduct entire liabilities from the stock. The remainder is known as the book value. You have to divide the book value by the number of shares to obtain the book value per share. This will represent the basic value of the organization as a going concern. Those stocks which use larger amount of capital, like steel companies or car manufacturers, generally trade as a percent of the book value.

**Tips and warnings**

- There are many methods to compute price per share estimation.
- These ranges are helpful in deciding if the specific share is economical or expensive.
- Comparison should be done against another analyst’s recommendations and it should be judged against last trade statistics.
- You should always compare your results with at least two or three other good sources.
- Calculation of share price is a bit tricky and it needs a lot of information.

I hope this article helped you in learning how to calculate price per share.

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