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.

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References in periodicals archive ?
The stock, which already had the lowest price-to-book ratio of any big European bank, has plunged almost 10% this week and 15% from its Monday peak, it stated.
Deutsche Bank unveils massive restructuring; cuts 18,000 jobs
This is the only group with a price-to-book ratio above 1x.
United Kingdom,United States : Only Half of Banks Globally Are Making Significant Advancements in Digital Transformation, Resulting in Lower Market Valuations, Accenture Report Finds
FAB has gained 33.26 per cent in the past year and has a price-to-book ratio 1.91 times.
FAB shares extend gains to reach all-time high
In terms of price-to-book ratio, Dubai currently trades at 0.9x which is a strong support factor.
Markets to rebound in 2019
In terms of revenues however, the report pointed out that revenue growth for the global banking sector remains muted, with its price-to-book ratio also consistently lower than that of every other major sector over the period from 2012 to 2017.
McKinsey review report: Global banking must push competitive advantages
The combined entity is valued at a price-to-book ratio of 1.4, according to calculations by Saudi Fransi Capital, which added that the deal significantly strengthens HSBC's presence in the Kingdom.
Alawwal and SABB merger to create Saudi Arabia's third largest bank
(BTMU, A/Stable/a), acquired a 19.9% stake in Danamon on 29 December 2017 from entities affiliated with Singapore's Temasek for USD1.2 billion, equivalent to a 3Q17 price-to-book ratio of 2x.
Mitsubishi UFJ Financial Group, Inc.'s ratings 'a' not affected
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.
Do stocks trading below book value offer great bargains?
We build portfolios of stocks traded below book value (i.e., showing a price-to-book ratio below 1) and compare the results to a broader benchmark, the Brazilian Ibovespa index, which accounts for approximately 80% of the volume traded in the Sao Paulo Stock Exchange.
The long-run performance of Brazilian stocks traded below book value/Desempenho de longo prazo das acoes Brasileiras negociadas abaixo do valor patrimonial/El desempeno de largo plazo de las acciones Brasilenas negociadas abajo del valor patrimonial
However, there has been an obvious post-revolution discount to all the recent acquisitions, with QNB/NSGB at a price-to-book ratio (P/B) of 1.9x, ENBD/Paribas at 1.6x, and Al Ahli Bank of Kuwait/Piraeus at 1.4x and Attijariwafa/Barclays-Egypt estimated at 1.7-1.8x versus a P/B of 6.0x in SanPaolo/Bank of Alexandria (BOA) back in 2006 and a 4.0x book for the deal that was never completed of Banque du Caire in 2007.
Egyptian banks emerge as net winners post-25 January Revolution
* Value, measured as a security's price-to-book ratio, with low-ratio stocks outperforming high-ratio stocks
Factor Investing Explained
Capital markets drive the return on capital toward the cost of capital, primarily through adjustments in the price-to-book ratio. If capital returns exceed the cost of capital, the price-to-book ratio will increase (prices will be bid up) to bring the return on capital back down to the cost of capital, and vice versa.
Finance and capital in the 21st century

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