P/B Ratio (Price-to-Book)

The ratio of a stock's market price to its book value per share.

What Is the Price-to-Book Ratio?

The P/B ratio compares a company's market value (stock price) to its book value (net assets). It tells you how much investors are paying for each dollar of the company's net assets.

P/B Ratio = Stock Price ÷ Book Value Per Share

Interpreting P/B

• P/B below 1.0: The stock trades below its net asset value — potentially undervalued, or the market doubts the quality of those assets.
• P/B of 1.0-3.0: Typical range for established companies.
• P/B above 3.0: The market values the company well above its tangible assets — pricing in growth, brand value, or intellectual property.

Best Use Cases

P/B is the go-to valuation metric for banks and financial institutions. When analyzing bank stocks during earnings season, the P/B ratio tells you whether the market trusts the quality of the bank's loan portfolio and balance sheet.