Price-to-Book Ratio — Stock Market Glossary

Price-to-Book Ratio (P/B)

The price-to-book ratio (P/B ratio) compares a company’s stock price to its book value — the net value of assets after subtracting liabilities. It tells you how much premium investors are paying over the company’s accounting net worth.

Formula

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

Where Book Value Per Share = (Total Assets − Total Liabilities) ÷ Shares Outstanding

Example: A stock at $40 with book value of $20 per share has a P/B of 2.0x — investors pay $2 for every $1 of net assets.

How to Interpret P/B

P/B Value	Interpretation
P/B < 1.0	Stock trades below book value — potentially undervalued, or assets are overestimated
P/B = 1.0	Stock trades at book value
P/B 1–3	Moderate; typical for mature companies
P/B > 10	High intangible value (brands, IP, software) or overvalued

When P/B Is (and Isn’t) Useful

P/B works well for:

Banks and financial companies (assets are mostly cash/loans)
Insurance companies
Capital-intensive industries (manufacturing, energy)

P/B is less meaningful for:

Software companies (main assets are intangible — people, code, brand)
Service companies (little physical assets)
Companies with heavy goodwill from acquisitions

Apple, for example, has a P/B ratio above 40 — because its value is brand, ecosystem, and intellectual property, not physical assets.

How It’s Used on This Site

Price-to-book appears in the Market Data card on every individual ticker page. It’s shown alongside P/E Ratio and Forward P/E as part of the complete valuation picture.

P/E Ratio — Valuation relative to earnings
EPS — Per-share earnings, another valuation input
Market Capitalization — Total size context