---
title: "Definition of P/B Ratio"
url: https://signalscreener.fr/definition/pb-ratio/
markdown_url: https://signalscreener.fr/definition/pb-ratio.md
description: "P/B Ratio compares stock price to book value per share."
type: glossary-definition
site: Signal Screener
language: en
keywords:
  - "P/B Ratio"
  - "Price-to-Book Ratio"
translations:
  es: https://signalscreener.fr/es/definition/pb-ratio.md
  fr: https://signalscreener.fr/fr/definition/pb-ratio.md
  pt: https://signalscreener.fr/pt/definition/pb-ratio.md
---

# Price-to-Book Ratio

## What is P/B Ratio?

P/B Ratio compares stock price to book value per share. It shows how much investors pay for each dollar of net assets. P/B < 1 might mean undervalued.

## Think of it like this

Buying a house: Book value is like the cost to build it from scratch. If you can buy it for less than construction cost (P/B < 1), it might be a bargain!

## Formula

```
P/B = Stock Price / Book Value Per Share
```

- **Stock Price**: Current market price
- **Book Value**: Total Assets - Total Liabilities

## Why it matters

- Values company based on assets
- P/B < 1 might signal undervaluation
- Important for asset-heavy companies
- Banks and financials rely on P/B

## What's a good value?

| Range | Rating | What it means |
|---|---|---|
| < 1 | Undervalued | Trading below book value - potential bargain |
| 1-3 | Fair Value | Reasonable valuation |
| 3-5 | Premium | Paying for intangibles (brand, patents) |
| > 5 | Expensive | Very high premium over assets |

## Real-world example

Bank of America P/B: 1.2 - typical for banks. Amazon P/B: 15 - investors value future earnings over current assets. Distressed company P/B: 0.5 - might be a value trap or opportunity.

## Things to watch out for

- Book value can be outdated
- Doesn't capture intangible assets well
- Tech companies often have high P/B
- Low P/B might signal problems

---

This is educational content, not financial advice.

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