The price-to-book ratio (P/B) compares a company's stock price to its book value — what would be left for shareholders on paper if the company sold every asset and paid off every debt. A P/B of 1.0 means the market values the company at exactly its accounting net worth; above 1.0 is a premium; below 1.0 is a discount.
P/B = share price ÷ book value per share, where book value per share = (total assets − total liabilities) ÷ shares outstanding. Example (illustrative): a company has $2 billion of assets and $1.2 billion of liabilities, leaving $800 million of book value, across 100 million shares — $8.00 of book value per share. If the stock trades at $24, its P/B is 24 ÷ 8 = 3.0: investors are paying three times the company's accounting net worth.
P/B is most meaningful for businesses whose value really is in physical or financial assets — banks, insurers, industrials. It is far less useful for asset-light companies (software, brands, services) whose real worth is people, code, and intangibles that a balance sheet barely captures — those routinely trade at very high P/B ratios without being "overvalued." A low P/B can signal a bargain or a troubled business; it is a starting question, not an answer.
P/B is one of the classic value metrics a value investor watches, alongside the price-to-earnings ratio. The underlying book value comes from a company's balance sheet in its SEC filings, free on EDGAR. None of this is investment advice.
It means the market values the company at exactly its book value — its assets minus its liabilities on the balance sheet. Above 1.0 is a premium to that net worth; below 1.0 is a discount.
No. A low P/B can mean the market has overlooked a solid company, or it can mean the business is genuinely troubled and the low price is justified. P/B is a starting question, not a verdict.
Because their real value is in intangibles — code, brands, people — that a balance sheet barely captures. Asset-light companies routinely trade at high P/B ratios without being overvalued.
Browse all S&P 500 tickers to see this metric applied to individual companies.
Educational research only — not investment advice.