PBR (Price-to-Book Ratio)
How many times book value per share (BVPS) the stock trades at — price versus the company's net assets.
In plain terms
If a company shut down today, sold all its assets, and paid off its debt, what is left for shareholders on the books is "net assets (equity)." PBR looks at how many times that net asset value the share price is.
A PBR of 1 means the price equals book net assets. 0.8 means it trades below book value; 3 means three times book value.
What it tells you
Even for companies where earnings are lumpy or negative — making PER hard to use — accumulated assets are relatively stable, so PBR lets you gauge "price versus asset value." It is especially useful for banks, insurers, and holding companies, where assets themselves are the core of the business.
PBR shows its real worth when paired with ROE (return on equity), not alone. For the same net assets, a company that earns a lot from them (high ROE) naturally deserves a higher PBR from the market.
Formula
PBR = current share price ÷ book value per share (BVPS) BVPS = shareholders' equity ÷ shares outstanding
What high or low means
A PBR under 1 means trading below book value, common in asset plays and banks. But it may also reflect concerns about a struggling business or impaired assets.
Companies with large intangible value that the books capture poorly — brand, technology, customer networks — naturally show high PBRs. A high PBR by itself does not mean "expensive."
For modern companies with large intangible assets (brand, technology), PBR loses meaning. Software and platform companies have their real value (engineers, code, brand) barely on the books, so net assets look small and PBR can soar into the dozens without being a "bubble." PBR works better in industries where assets are the value.
When ROE is low (the company cannot earn from its net assets), a low PBR is often "cheap for a reason" rather than undervalued. Judging cheapness from PBR alone is a trap — always look at how much it earns on equity (ROE) too.
Buybacks, or write-downs that sharply cut asset values (impairments), shrink the denominator (equity) and can make PBR look higher than it really is. To read PBR properly you have to look at how the denominator (net assets) is composed.
In 2023, the Tokyo Stock Exchange took the unusual step of pressing listed companies trading below a PBR of 1 to "present improvement plans." A PBR under 1 means the price is below even the company's book net assets — a signal the market values it at less than its net worth.
Long-undervalued Japanese companies responded to the pressure with buybacks and bigger dividends, and the market revived. It was a recent case showing that a PBR of 1 acts as a psychological dividing line for how a company is valued.
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see PBR and other financial metrics alongside the sector average.
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.