Price-to-Book Ratio

The Price-to-Book (P/B) ratio compares a company's market value (its stock price multiplied by shares outstanding) to its net asset value (the company's assets minus liabilities). It shows how much investors are willing to pay for each dollar of the company's net assets. A P/B ratio below 1 suggests the stock may be undervalued—selling for less than its net assets—while a ratio above 1 indicates the company might be considered overvalued, with investors expecting higher growth or earning potential. It is a useful metric for assessing a company's valuation relative to its tangible assets.