Why the balance sheet sometimes matters more than the income statement

We often focus heavily on revenue growth and EPS, but in certain industries the balance sheet can be the real story.

If a company suddenly acquires significant hard assets, especially real estate or mortgage portfolios, book value and long-term cash flow potential can change dramatically.

The tricky part is that markets sometimes take a while to reprice those assets.

Do you guys pay much attention to price-to-book changes when evaluating small companies?