Definition

The Price-to-Book (P/B) ratio compares a company's market price to its book value per share, showing how expensive the stock is relative to its net assets. A low P/B may indicate the stock is undervalued or that the market expects weak future profitability. A high P/B reflects strong growth expectations or high returns on equity. The ideal range varies by sector — financials and real estate often trade at lower multiples (0.8–1.5×), while technology and consumer brands trade higher (3–6×) due to intangible assets and stronger profitability.