P/B Ratio
-
Premium / Discount
Assessment
-
When Should You Use This?
Use P/B to find value stocks, especially in banking, insurance, and asset-heavy industries. A P/B below 1.0 means the stock trades below the liquidation value of its assets — a classic value signal.
How It Works
1
Enter Price
Input the current stock price from your broker or financial site.
2
Enter Book Value
Book value per share = total equity / shares outstanding. Found on the balance sheet or financial data sites.
3
Evaluate
P/B below 1 = potential bargain. P/B 1-3 = fair for most sectors. P/B above 5 = paying a steep premium for growth or brand value.
Frequently Asked Questions
Book value is the net asset value of a company: total assets minus total liabilities. Book value per share divides this by shares outstanding.
Stocks trade below book value when the market expects future losses, asset write-downs, or the company to never earn adequate returns on its assets.
No. A low P/B could mean the company is in trouble. Always combine P/B with profitability metrics (ROE, earnings growth) to avoid value traps.
Banking and financial services are the primary P/B sectors because their assets (loans, securities) are already marked to market value. P/B is less useful for tech or service companies.
Use P/E for profitable companies. Use P/B when the company has losses (negative EPS makes P/E meaningless) or in asset-heavy industries like banking and real estate.