Price-to-Book Ratio Calculator
Calculate the price-to-book (P/B) ratio from share price and book value per share to gauge how a stock is valued against its net assets.
How it works
P/B ratio = share price ÷ book value per share
The price-to-book ratio compares a stock’s market price to its accounting net worth per share — the assets left for shareholders after subtracting all liabilities. A P/B below 1 means the market values the company at less than its stated net assets, which can flag a bargain or a business the market expects to destroy value. It is most useful for asset-heavy firms like banks and insurers, and least useful for asset-light companies whose worth lies in brands and intangibles the balance sheet undercounts.
Worked example
A stock at $150 with a book value per share of $40 has a P/B of 150 ÷ 40 = 3.75× — investors are paying nearly four times the company’s net asset value, a premium that only pays off if the business earns strong returns on that equity.
Frequently asked questions
What does a P/B below 1 mean?
The stock trades for less than the accounting value of its net assets. That can signal an undervalued company or one the market believes will erode its book value, so dig into why before assuming a bargain.
Which companies is P/B best for?
Asset-heavy businesses — banks, insurers, real estate and industrials — where the balance sheet captures most of the value. It works poorly for tech and brands whose worth is intangible.
How does P/B relate to return on equity?
They go together: a company earning a high return on equity deserves a higher P/B, since each dollar of book value produces more profit. Judge P/B alongside ROE, not in isolation.
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Educational estimate, not investment advice. Ratios and valuation models are simplifications; verify figures against official filings and consult a licensed advisor before investing.