Book value per common share (BVPS) measures the amount of a company's equity that is allocated to each share of its common stock. It is derived from the company's total common equity from its balance sheet and is the total amount that would be returned to a shareholder if the company is liquidated. BVPS is also known as net asset value or book value per share.

This metric is used to compare the market value of a company’s outstanding common shares with the company’s book value. If a company’s BVPS is higher than its market value per share, then its stock may be considered to be undervalued.

BVPS is calculated by dividing the company’s shareholders’ equity by the number of common shares outstanding. Shareholders’ equity is the total number of assets owned by the company, minus its liabilities. Common Stock is the equity available to common shareholders and is determined by subtracting preferred stock from total shareholder’s equity.

Book value per common share is a useful tool to help investors identify potential investments that may be undervalued. It can be used to judge the performance of a company's price relative to its book value. For example, a company with a higher BVPS indicates that equity is worth more than the stock price, which may indicate the stock is undervalued. Therefore, investors may want to consider investing in stocks with higher BVPS relative to their market value.

Investors should note that BVPS does have some limitations. It does not measure the company's intangible assets, such as reputation and brand strength, which may be important factors for stock valuations. Also, BVPS is only a snapshot of a company's balance sheet at a given time and does not take into account any future investments or liabilities that may affect the company’s book value.

Overall, book value per common share can be an important tool for investors to assess companies’ financial health and gauge whether their stocks may be undervalued. It can help investors identify possible investment opportunities in the companies with good financials but are trading at low prices.