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 ?
banks valuations remains significant, with an average price-to-book ratio of 0.
A company's willingness to pay regular cash dividends at an increasing rate sends a powerful clue about its future growth, which helps drive price-to-book ratio to increase.
The price-to-book ratio and changes in market capitalization served as measures of changes in firm size or value.
The bank is expected to apply to the Hong Kong Stock Exchange soon, to lower the minimum price-to-book ratio to 1.
East Capital Explorer invests at a valuation corresponding to a price-to-book ratio of 1.
The deal may lure investors back to bank shares trading at a 67 per cent discount to their five-year average price-to-book ratio and a 48 per cent discount to the average price-to-earnings ratio, Hawa wrote.
After the bubble burst, the average price-to-book ratio for Merrill Lynch's 20 most widely held stocks on September 2, 2002, was 4.
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.
The forecast volatility is calculated using historical market data such as share price and trading volume, financial key figures (ratio of dividends to price, price-to-book ratio, forecast earnings growth), sector and total shareholder return.
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.