Price-to-book ratio

Price-to-Book

A ratio of the share price of a publicly-traded company to its book value per share, which is the company's total asset value less the value of its liabilities. The P/B is a ratio of investor sentiment on the value of a stock to its actual value according to the Generally Accepted Accounting Principles. A high P/B means either that investors have overvalued the company, or that its accountants have undervalued it.

Price-to-book ratio.

Some financial analysts use price-to-book ratios to identify stocks they consider to be overvalued or undervalued.

You figure this ratio by dividing a stock's market price per share by its book value per share.

Other analysts argue that book value reveals very little about a company's financial situation or its prospects for future performance.

References in periodicals archive ?
The bank is expected to apply to the Hong Kong Stock Exchange soon, to lower the minimum price-to-book ratio to 1.
Morris uses the price-to-book ratio, a measure of a stock's value in comparison to the worth of a company's hard assets, to separate the winners from the losers.
As with the P/E ratio, a mutual fund's price-to-book ratio is the weighted average of all of the fund's holdings.
For each country, they calculated two measures of how stock markets value enterprises - the market price-to-book ratio of equity for the average firm, and the ratio of market value to book value for debt plus equity for the average firm.
A company with a book value of $5 per share and a stock price of $15 has a price-to-book ratio of 3:1.
Health insurer Cigna (NYSE: CI) not only sells at a P/E of 15, but at a miniscule price-to-book ratio of 2.
Japanese companies' price-earnings and price-to-book ratios are so low that for portfolio investors, the risk is not investing in Japan.
We studied five years of data, including market values, returns on assets, returns on equity, price-to-book ratios, price-to-earnings ratios and revenue growth.
Russell 1000(R) Value Index tracks stocks in the Russell 1000 Index with lower price-to-book ratios.
Russell 1000 Value Index tracks stocks in the Russell 1000 Index with lower price-to-book ratios.
The Russell 1000 Value Index tracks stocks in the Russell 1000 Index of large cap stocks with the lowest price-to-book ratios.