Book to Market Mean Difference

Book to Market (BM) Mean Difference = Current BM – 10 year average BM

This indicator tells you how a company is currently valued in terms of BM compared to its average BM over the past 10 years.

Kindly note that BM is the inverse of the Price to book ratio. Thus a high BM ratio means a company is undervalued.

For example:
BM Mean Difference = 0,9 – 1,2 = -0,3
This means that the company currently has a lower BM ratio (is more expensive) compared to its average BM valuation over the past 10 years.

Thus the higher BM Mean Difference value is the more undervalued the company currently is compared to the past.