Price-to-Book (P/B) Ratio Calculator
Determine whether a stock is undervalued or overvalued based on its book value
?The stock’s current trading price per share
?(Total Assets – Total Liabilities) / Shares Outstanding
Valuation Results
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Price-to-Book Ratio
What Does the P/B Ratio Mean?
The P/B ratio compares a company’s market price to its book value per share.
P/B Ratio Interpretation:
- P/B < 1.0: Potentially undervalued (trading below book value)
- P/B = 1.0: Market price equals book value
- P/B > 1.0: Market premium over book value
- P/B > 3.0: Possibly overvalued (common in high-growth stocks)
Industry Benchmarks:
- Banks/Financials: 0.5 – 1.5
- Manufacturing: 1.0 – 2.5
- Tech/Growth Stocks: 3.0 – 10.0+
Why the Price-to-Book Ratio Matters
The P/B ratio is a key financial metric used by value investors to assess whether a stock is trading at a fair valuation relative to its net asset value. A low P/B ratio may indicate an undervalued stock, while a high P/B ratio could suggest overvaluation or high growth expectations.
Limitations of the P/B Ratio
- Less useful for service-based or asset-light companies
- Does not account for intangible assets (brand value, patents)
- Book value may not reflect true market value of assets