Price-to-Book Ratio Calculator
Compare stock price to book value per share
P/B Formulas
Understanding Price-to-Book Ratio
Price-to-Book (P/B) ratio compares a company's market price to its book value—the net asset value on the balance sheet. It shows how much investors pay per dollar of equity. A P/B of 2.0 means the stock trades at twice its book value.
P/B is particularly useful for asset-heavy industries like banking, insurance, and real estate where book value is meaningful. A P/B below 1.0 suggests the stock trades below liquidation value—potentially undervalued or signaling problems.
Unlike P/E which uses earnings (volatile), P/B uses book value (stable). This makes P/B useful for companies with negative or volatile earnings. However, book value can be misleading for tech companies where intangible assets dominate.
P/B Interpretation
P/B < 1.0
Trading below book value. Potentially undervalued or market sees hidden problems.
P/B 1.0-2.0
Reasonable for mature, asset-heavy companies. May indicate fair value.
P/B 2.0-5.0
Premium valuation. Market expects growth or has intangible value.
P/B > 5.0
High premium. Typically tech/growth stocks with significant intangible assets.
P/B Ratios by Sector
| Sector | Typical P/B | Low P/B | Notes |
|---|---|---|---|
| Banks | 0.8-1.5 | < 0.8 | Asset-based business |
| Insurance | 1.0-2.0 | < 0.9 | Book value meaningful |
| Utilities | 1.2-2.0 | < 1.0 | Regulated assets |
| Technology | 3.0-10.0+ | < 2.0 | Intangibles dominate |
| Manufacturing | 1.5-3.0 | < 1.2 | Physical assets |
Using P/B Effectively
Best for Asset-Heavy
P/B is most meaningful for banks, insurance, REITs, and asset-intensive businesses.
Combine with ROE
High P/B is justified if ROE is high. P/B = ROE × P/E. Low P/B with low ROE isn't a bargain.
Check Tangible Book
Tangible book excludes goodwill and intangibles—more conservative for acquisitive companies.
Watch for Write-downs
Asset write-downs increase P/B. Check if book value includes impaired assets.
Frequently Asked Questions
Why would a stock trade below book value?
Markets expect losses, asset impairments, or believe book value is overstated. Banks often trade below book during crises. It can be a value opportunity or a value trap—do deep analysis.
P/B vs P/E: which is better?
Neither is universally better. P/E suits profitable, stable companies. P/B suits asset-heavy companies or those with volatile/negative earnings. Use both alongside other metrics.
What's tangible book value?
Book value minus intangible assets (goodwill, patents, trademarks). More conservative measure of liquidation value. Important for companies that grew through acquisitions.
Why do tech stocks have high P/B?
Tech value comes from intellectual property, brand, network effects—intangibles not on the balance sheet. Book value vastly understates true economic value of these companies.
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