PBR (Price-to-Book Ratio)
How many times book value per share (BVPS) the share price is — an indicator that views the share price against the company's net assets.
PBR = current share price ÷ book value per share (BVPS)
A PBR below 1x means the stock trades below book value, something often seen in asset-heavy names and banks.
In plain terms
If the company shut down right now, sold all its assets, and paid off its debts, what would remain for shareholders on the books is "net assets (shareholders' equity)." PBR looks at how many times that net asset amount the share price is.
A PBR of 1x means the share price is exactly the same as the book value of net assets. At 0.8x it trades below book value, and at 3x it trades at three times book value.
Each cell is what the books say one share holds. Where P/E measures by earning power, this measures by what is owned.
Book values are recorded at what was paid. Land bought long ago sits below what it would fetch, and things like brand or technology are not on the books at all.
The figures belong to a made-up company, Example Inc. Every picture in this glossary uses the same company, so you can see how the metrics connect.
What it tells you
Even for companies where earnings swing around or are negative, making PER hard to use, accumulated assets are relatively stable, so PBR lets you gauge "share price versus asset value." It is especially useful in industries where the assets themselves are the core of the business, such as banks, insurers, and holding companies.
PBR shows its real value when viewed alongside ROE (return on equity) rather than on its own. With the same net assets, a company that generates a lot of profit from them (high ROE) naturally tends to be assigned a higher PBR by the market.
Formula
PBR = current share price ÷ book value per share (BVPS) BVPS = shareholders' equity ÷ shares outstanding
What high or low means
A PBR below 1x means the stock trades below book value, something often seen in asset-heavy names and banks. That said, it can also reflect concerns about a struggling business or impaired assets.
Companies with large intangible value that does not show up well on the books — brand, technology, customer networks — naturally show a high PBR. A high PBR by itself does not indicate a problem.
For today's companies with large intangible assets (brand, technology, and so on), PBR carries less meaning. For software and platform companies, the real value (developers, code, brand) barely appears on the books, so net assets come out small, and even if PBR climbs to dozens of times you cannot conclude it is a "bubble." PBR works better in industries where assets are the value.
When ROE is low (net assets are not generating profit), a low PBR is often not an opportunity but a "reason it is that way." So judging that a price is low from PBR alone makes it easy to fall into a trap. ROE is what separates an opportunity from a "reason it is that way."
If a company buys back its own shares, or takes an accounting charge that sharply writes down asset value (impairment), the denominator — shareholders' equity — shrinks, which can make PBR look higher than it really is. To read why PBR sits where it does, you need to look at how the denominator (net assets) is made up.
In 2023, the Tokyo Stock Exchange in Japan took the unusual step of pressing listed companies with a PBR below 1x to "present plans for improvement." A PBR below 1x means the share price does not even reach the company's book net assets — a sign that the market does not value the company as much as its net assets.
Japanese companies that had long sat at low PBR levels responded to this pressure by expanding share buybacks and dividends, and the market picked up. It is a recent case showing that a PBR of 1x works as one psychological dividing line in how corporate value is viewed.
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see PBR alongside the sector benchmark.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.