R/Justified_PB.R

In JancoS/EquityR: Common stock valuation methods. Including single stage DDM, multistage DDM and basic CF models. Package mainly builds on the tidyquant and finreportr packages.

#' @title Justified_PB
#' @description Calculate the justified Price to Book ratio based on fundamentals
#' @param Ticker The symbol of the stock to be evaluated
#' @param Req The required return on equity
#' @param growth_rate Optional growth_rate as percentage, otherwise calculated using Growth_Rate function
#' @export
#' @return Just_PB The justified PB output

Justified_PB <- function(Ticker, Req, growth_rate = 0) {

  # Get the latest date and data

  Tod <- lubridate::today() - lubridate::days(1)

  MData <- tq_get(Ticker, get = "key.ratios")

  Price <- tq_get(Ticker, get = "stock.prices", From = Tod)

  # Get the ROE

  ROE <- MData %>% filter(section == "Profitability") %>%
    select(data) %>% unnest() %>%
    filter(category == "Return on Equity %")

  ROE_latest <- ROE %>% filter(row_number() == nrow(ROE)) %>% pull(value)

  # Get the growth rate

  if (growth_rate == 0) {

    growth_rate <- Growth_Rate(Ticker)

  } else {

    growth_rate <- growth_rate/100

  }

  # Calculate the justified PB ratio

  Justified_PB <- (ROE_latest - growth_rate)/(Req - growth_rate)

  # Get the PB from Morningstar

  PB_Morningstar <- MData %>% filter(section == "Valuation Ratios") %>%
    select(data) %>% unnest() %>%
    filter(category == "Price to Book") %>%
    filter(row_number() == nrow(ROE)) %>%
    pull(value)

  Just_PB <- list(Justified = Justified_PB, Morningstar = PB_Morningstar)

  return(Just_PB)

}