The net asset value (NAV) of something is its actualized value, that is, total assets minus total liabilities. This can also be known as book value.
NAV = [Assets - Liabilities]
For example, if you own a home worth $300,000, but have $50,000 of debt outstanding on the home, the NAV is $250,000.
NAV is calculated for mutual funds and ETFs regularly, but the term can also be used to describe the value of a piece of property, company, or really any asset. To calculate NAV for a mutual fund, the fund would tally up the value of its holdings (assets), minus any debt it has (liabilities), and divide by the number of shares outstanding. The resulting number is the NAV per share, which is calculated for mutual funds at the end of each trading day. Exchange-traded funds (ETFs) calculate their NAV in the same way, and ideally their shares would be priced at NAV, but shares can trade above or below NAV based on demand.
The NAV is also a metric some use when evaluating stocks. If a company had $20 billion of assets, and $600 million of debt with 100 million shares outstanding, that would mean the NAV per share is:
20 billion = 20,000 million, [20,000 - 600 = 19,400 = NAV]
Shares outstanding = 100 million, [19,400 / 100 = 194]
NAV per share would be $194.
If this stock was trading at $210, an investor might assume the stock was over-valued and wait for the price to go down to buy it. On the other hand, if the stock was trading at $180 the investor would realize he was getting a great deal, as he had found an undervalued stock! Unfortunately, there are professional investors who spend their days trying to find any stocks that are priced incorrectly (arbitrage) to make money, so the undervalued scenario is highly unlikely.