What is Price-to-Book (P/B) or the price-to-book-value ratio?
Updated June 27, 2026 · DeepTicker
The Price-to-Book (P/B) or price-to-book-value ratio compares the price of a stock with the company's book value (shareholders' equity) per share. A P/B of 1x means you pay exactly the book value; as a rough guide, values below 1x can signal "cheap" stocks according to the balance sheet.
What Price-to-Book (P/B) is and why it matters
The Price-to-Book (P/B) is one of the oldest valuation ratios and a favourite of the value investing school, the current that starts with Benjamin Graham. Its idea is very concrete: to compare what the market pays for a stock with what the company would be worth "on paper", that is, according to its accounting shareholders' equity (assets minus liabilities).
The formula divides the price per share by the book value per share. Book value per share is total shareholders' equity divided by the number of shares. If a company has shareholders' equity of €1,000 million and 100 million shares, its book value per share is €10; if the stock trades at €12, its P/B is 1.2x.
The classic interpretation is that a P/B below 1x signals that the market values the company at less than its net assets are worth on the books: in theory, a possible bargain. A P/B above 1x indicates that the market pays a premium over book value, usually because the company generates good profitability or has intangible assets (brand, technology) that the balance sheet does not capture.
The Price-to-Book is especially useful in sectors where the balance-sheet assets reflect the real value of the business well: banks, insurers, real estate and investment holdings. In a bank, assets (loans, bonds) and liabilities (deposits) are close to market value, so accounting equity is a reasonable measure of its value. That's why analysts value banks mainly on P/B and on ROE, rather than on the P/E.
By contrast, the P/B loses meaning in companies whose value lies in intangible assets: a tech company, a consultancy or a pharmaceutical are worth above all for their brand, their patents, their software or their talent, and none of that appears (or appears poorly) on the accounting balance sheet. That's why many large tech companies trade at a P/B of 10x, 20x or more without that meaning they are "expensive": their real value simply isn't on the books.
This is where DeepTicker adds rigour with honesty. The system detects the type of company and tells you which metric to look at: for a bank, the classic Reverse DCF does not apply, so DeepTicker prioritises the P/B, the ROE and the Tier 1 ratio, just as professional analysts would. This criterion of "using the right ratio for each business" is the heart of quality analysis by sector and is reflected in the DeepScore, which benchmarks the Price-to-Book by sector within its 0-100 quality score.
And when the value is off the balance sheet, DeepTicker does not stop at the P/B: it applies the Reverse DCF following the discounted cash flow (DCF) methodology, which values the company by the cash flows it will generate, not by its books. That way you combine two views —the floor of book value and the engine of future cash— with serious fundamental analysis, made simple and explained so you learn by using it.
How Price-to-Book (P/B) is calculated
Price-to-Book (P/B) = Price per share / Book value per share
- · Price per share: the stock's current market quote.
- · Book value per share: total shareholders' equity divided by the number of shares.
- · Shareholders' equity: total assets minus total liabilities (what is left for shareholders).
- · Equivalent: P/B = Market capitalization / Total shareholders' equity.
- · Tangible P/B: excludes intangibles and goodwill from shareholders' equity.
Example of Price-to-Book (P/B)
Suppose a bank with shareholders' equity of €8,000 million and 2,000 million shares: its book value per share is 8,000 / 2,000 = €4. If the stock trades at €3.20, its P/B is 3.20 / 4 = 0.8x. The market values the bank below its book value, something common in banking when investors doubt the quality of the assets or future profitability.
Compare it with a tech company with shareholders' equity of €500 million and 100 million shares: its book value per share is €5. If it trades at €75, its P/B is 15x. At first glance it looks extremely expensive next to the bank, but it is not comparable: the tech company's value lies in its software, its brand and its growth, not in its accounting assets.
This illustrates why the Price-to-Book must be used according to the type of business. For the bank, DeepTicker prioritises the P/B, the ROE and the Tier 1, and warns you that the classic Reverse DCF does not apply. For the tech company, it turns to the Reverse DCF to deduce what growth that price is pricing in. The tool chooses the honest metric for each case instead of applying the same formula to everything.
How to interpret Price-to-Book (P/B)
- →A P/B below 1x suggests the market values the company at less than its accounting equity: a possible bargain or a sign of problems.
- →A high P/B (>3x-4x) usually reflects a high ROE or valuable intangibles not captured on the balance sheet.
- →There is a direct relationship between P/B and ROE: the higher the return on equity, the more a high P/B is justified.
- →The Price-to-Book is more reliable in banks, insurers and real estate than in intangible-heavy companies.
- →It is useful when earnings are volatile or negative, because equity is more stable than the annual result.
- →Compare it with the sector and cross it with the ROE; a low P/B with a poor ROE is rarely a real opportunity.
Common mistakes with Price-to-Book (P/B)
- ✕Using the Price-to-Book in intangible-heavy companies (software, brands) where the balance sheet does not reflect the real value.
- ✕Believing a P/B below 1x is always a bargain, without checking whether there are write-downs or poor profitability behind it.
- ✕Ignoring the ROE: a high P/B without a high ROE is a warning sign, not a sign of quality.
- ✕Not distinguishing tangible book value from the one that includes goodwill and intangibles, which can be inflated.
- ✕Comparing the P/B between a bank and a tech company as if they were equivalent businesses.
How to interpret a high or low Price-to-Book
A low Price-to-Book (below 1x) indicates that the market values the company at less than its accounting equity. In the value investing tradition this is seen as a possible undervaluation, but it can also reflect that the market anticipates losses, asset write-downs or poor profitability. A P/B of 0.5x is rarely "free money": there is usually a reason.
A high Price-to-Book (above 3x-4x) indicates that the market pays a premium over the books, usually because the company generates a high ROE or has valuable intangibles. There is a direct relationship between P/B and ROE: a company that earns a lot on its equity deserves to trade above its book value, and vice versa.
The interpretive key is to cross the P/B with the ROE. A high P/B with a high ROE is coherent; a high P/B with a low ROE is a warning sign. That's why, when analysing banks, DeepTicker presents the P/B and the ROE together: an institution trading at 0.8x book value with a 12% ROE may be more attractive than another at 1.5x with a 6% ROE.
Price-to-Book by sector: where to use it and where not to
The Price-to-Book shines in sectors intensive in tangible and financial assets: banks, insurers, real estate (where it is complemented with the value of the properties), investment holdings and heavy industrial companies. In these cases accounting equity is a reasonable approximation of the real value, and a low P/B can signal genuine opportunities.
By contrast, the P/B loses usefulness in companies whose value lies in intangibles: software, services, consumer brands, pharmaceuticals. Apple, Microsoft or a consultancy are worth much more than their books because their main asset —brand, intellectual property, talent— is not well captured on the balance sheet. A P/B of 15x there does not mean "expensive".
That's why DeepTicker benchmarks the Price-to-Book by sector within the DeepScore and, above all, detects when the P/B is the right metric and when it isn't. For a bank it prioritises it; for a tech company it relegates it and uses the Reverse DCF. It is the principle of using the right indicator for each type of business, instead of forcing the same yardstick on everyone.
Price-to-Book versus the P/E and intrinsic value
The Price-to-Book and the P/E look at different things: the P/B compares the price with equity (a stock of value), while the P/E compares it with earnings (a flow). The P/B is more stable —equity varies little from one year to the next— and that's why it is useful when earnings are volatile or negative, as in banks in crisis or cyclicals at the trough.
Versus intrinsic value calculated by discounted cash flow, the P/B offers an accounting "floor", not an estimate of the real economic value. Book value says how much the assets are worth according to accounting rules; intrinsic value says how much the business is worth for the cash it will generate. Both complement each other: the first gives security, the second gives potential.
The ideal is not to choose, but to combine. DeepTicker shows you the P/B, the P/E and the Reverse DCF verdict in a single profile, along with notes on which metric is most reliable for that type of company. That way you combine three views —book value, discounted flows and quality by sector— without having to master the three separately.
How to see the Price-to-Book of any stock on DeepTicker
On DeepTicker you can check the Price-to-Book (P/B) of any US, European, IBEX or China stock, already calculated from current shareholders' equity and price, and compared with its sector and its history. You don't need to look up equity in the balance sheet or divide by hand: you have it with its context.
The P/B is integrated into the DeepScore benchmarked by sector, and the tool tells you when it is the relevant metric (banks, insurers, real estate) and when it is better to look at something else. For those sectors, it presents it next to the ROE and the Tier 1; for intangible-heavy companies, it prioritises the Reverse DCF (discounted cash flow).
With the screener (140+ filters and presets such as Graham's) you can search for stocks with a low Price-to-Book, combine it with ROE, debt or margins, and build your own value screen. Every figure comes explained, no black boxes, so the more you use it, the better you distinguish a real bargain from a value trap. It is information and analysis, not financial advice.
On DeepTicker you get this metric calculated and explained for thousands of stocks, with no spreadsheets.
Try DeepTicker free →Frequently asked questions about Price-to-Book (P/B)
What is Price-to-Book (P/B) in a few words?
It is the price-to-book-value ratio: it compares the price of the stock with shareholders' equity per share. A P/B of 1x means you pay exactly the book value; below 1x, less than the book value.
How is Price-to-Book calculated?
You divide the price per share by the book value per share (shareholders' equity divided by number of shares). For example, a stock at €3.20 with a book value of €4 has a P/B of 0.8x.
What Price-to-Book is considered good?
It depends on the sector. In banks and real estate, a P/B below 1x can be attractive if the ROE is decent. In intangible-heavy companies, a high P/B is normal. Always cross it with the ROE and the sector.
Why do some companies have such a high Price-to-Book?
Because their value lies in intangibles (brand, patents, software, talent) that the balance sheet does not capture well, or because they generate a very high ROE. A tech company can trade at 15x book value without being "expensive".
For which sectors does Price-to-Book work best?
For sectors intensive in tangible and financial assets: banks, insurers, real estate and investment holdings, where accounting equity approximates the real value of the business well.
What is the difference between Price-to-Book and the P/E?
The P/B compares the price with equity (a stock of value); the P/E compares it with earnings (a flow). The P/B is more stable and useful when earnings are volatile or negative.
Does a low Price-to-Book mean the stock is cheap?
Not always. A low P/B can be a bargain or reflect write-downs, losses or a poor ROE. You have to check the quality of the assets and profitability before concluding it is an opportunity.
How do I see the Price-to-Book of a stock on DeepTicker?
You search for the stock and see its P/B already calculated and compared with its sector and history, integrated into the DeepScore. The tool tells you whether it is the right metric (banks) or whether to look at the Reverse DCF.
Educational content by DeepTicker. This is not financial advice or a recommendation to buy or sell. Investing involves risk of loss.
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Put Price-to-Book (P/B) to work with the DeepTicker Guide, the Stock Screener and the DeepTicker Score.