Share Price

• The share price of a stock is the price at which an investor can buy or sell a stock at any given time. It is also called market value.
  
  

Book Value

• Book value can be defined as cost minus accumulated depreciation. It is the value at which assets are carried on a company's balance sheet. For example, new office computers would be carried on the books at their purchase price, but in later years their value would be marked down, to account for wear and tear.
  
  

Use of Book Value

• Book value allows a company to recover some of the costs it took when it had to purchase new assets (for example, new computers). Because this depreciation accounting is the main function of book value, it may not resemble market value.
  
  

Differences

• Put another way, book value is the total value of a given company's assets that its shareholders would receive if a company had to be liquidated. So it is only an assessment of what a company has at the moment. By contrast, market value takes into account potential future growth.
  
  

Investing Uses

• Investors can use share price and book value to determine if a stock is over- or undervalued. For example, if a company has modest growth prospects and is in no danger of liquidation, but is trading for less than the value of its current assets, it may be undervalued. This is because if investors bought the stock at the current share price, they would be getting its assets at a discount, with any future growth also thrown in for free.