Price/Book Ratio

The Price/Book Ratio (P/B) is a financial metric that compares a company's current market price per share to its book value per share. Book value represents the net asset value of a company – its total assets minus liabilities. A P/B ratio below 1 suggests a stock might be undervalued, while a ratio above 1 could indicate overvaluation. Value investors often use P/B ratios to identify potentially undervalued stocks.