Price-to-Book Ratio Calculator: Is This Stock a Bargain?

Is a 3.00 P/B good or bad?

On the defaults — a $150.00 share price and $50.00 of book value per share — the P/B ratio is 3.00. The P/B ratio is the price you pay for each dollar of the company’s net assets — the share price divided by the book value per share. As a rough yardstick, a P/B below 1.00 can mean the market values the company at less than its net assets — or that the assets are worth less than the books say. A P/B of 3.00 means the market pays $3 for each $1 of book value — the market expects the assets to earn more than their book value, or the stock is expensive for its net assets. A 3.00 P/B is neither good nor bad on its own: it is the price per dollar of net assets, and the industry decides what that price means.

Three things about the model are worth stating plainly.

First, the P/B ratio is $150.00 ÷ $50.00 = 3.00. Second, the share price needed for a 4.00 P/B is 4.00 × $50.00 = $200.00. And third, the BVPS needed for a 4.00 P/B is $150.00 ÷ 4.00 = $37.50; all listed in Accuracy & limitations.

The worked example, line by line

Setup: $150.00 share price, $50.00 book value per share, target P/B 4.00.

Line 1 — the P/B ratio. The P/B ratio is $150.00 ÷ $50.00 = 3.00.

Line 2 — the share price needed. The share price needed for a 4.00 P/B is 4.00 × $50.00 = $200.00.

Line 3 — the BVPS needed. The BVPS needed for a 4.00 P/B is $150.00 ÷ 4.00 = $37.50.

Line 4 — the check. $200.00 ÷ $50.00 = 4.00, the target P/B; and $150.00 ÷ $37.50 = 4.00, the target P/B.

Every branch, checked

Share price $180.00: Share price $180.00; book value per share $50.00; P/B ratio 3.60; share price needed for the 4.00 target $200.00; BVPS needed for the 4.00 target $45.00 — With a share price of $180.00 the P/B rises to 3.60 — the market pays $3.60 for each $1 of book value.

BVPS $60.00: Share price $150.00; book value per share $60.00; P/B ratio 2.50; share price needed for the 4.00 target $240.00; BVPS needed for the 4.00 target $37.50 — With BVPS of $60.00 the P/B falls to 2.50 — the market pays $2.50 for each $1 of book value.

Share price $90.00: Share price $90.00; book value per share $50.00; P/B ratio 1.80; share price needed for the 4.00 target $200.00; BVPS needed for the 4.00 target $22.50 — With a share price of $90.00 the P/B falls to 1.80 — the market pays $1.80 for each $1 of book value.

BVPS $40.00: Share price $150.00; book value per share $40.00; P/B ratio 3.75; share price needed for the 4.00 target $160.00; BVPS needed for the 4.00 target $37.50 — With BVPS of $40.00 the P/B rises to 3.75 — the market pays $3.75 for each $1 of book value.

Share price $75.00: Share price $75.00; book value per share $50.00; P/B ratio 1.50; share price needed for the 4.00 target $200.00; BVPS needed for the 4.00 target $18.75 — With a share price of $75.00 the P/B falls to 1.50 — the market pays $1.50 for each $1 of book value.

BVPS $0: Share price $150.00; book value per share $0.00; P/B ratio — (undefined: no book value to divide the price by); share price needed for the 4.00 target —; BVPS needed for the 4.00 target — — With no book value there is nothing to divide the price by, so the P/B ratio cannot be computed — the calculator shows “—” with a note, never Infinity or NaN.

What-if bars — Share price $200.00, BVPS $75.00, share price $100.00: share price $200.00: P/B 4.00; BVPS $75.00: P/B 2.00; share price $100.00: P/B 2.00 — A $200.00 share price gives a P/B of 4.00; BVPS of $75.00 gives a P/B of 2.00; a $100.00 share price gives a P/B of 2.00.

The reverses, worked backwards

Smallest whole-cent share price for the P/B to reach 3.00: At the displayed $150.00 the figures are Share price $150.00; book value per share $50.00; P/B ratio 3.00; share price needed for the 3.00 target $150.00; BVPS needed for the 3.00 target $50.00. At the displayed $150.00 the P/B is 3.00 (exactly 3.00). At $149.99 the price is 1 cent short of the $150.00 needed — and the unrounded P/B is 2.9998, which displays as 3.00 after rounding, so $150.00 is the smallest whole-cent share price for the P/B to reach 3.00.

Smallest whole-cent share price for the P/B to reach 4.00: At the displayed $200.00 the figures are Share price $200.00; book value per share $50.00; P/B ratio 4.00; share price needed for the 4.00 target $200.00; BVPS needed for the 4.00 target $50.00. At the displayed $200.00 the P/B is 4.00 (exactly 4.00). At $199.99 the price is 1 cent short of the $200.00 needed — and the unrounded P/B is 3.9998, which displays as 4.00 after rounding, so $200.00 is the smallest whole-cent share price for the P/B to reach 4.00.

Largest whole-cent BVPS for the P/B to STAY at or above 3.00: At the displayed $50.00 the figures are Share price $150.00; book value per share $50.00; P/B ratio 3.00; share price needed for the 3.00 target $150.00; BVPS needed for the 3.00 target $50.00. At the displayed $50.00 the P/B is 3.00 (exactly 3.00). At $50.01 the BVPS is 1 cent over the $50.00 needed — and the unrounded P/B is 2.999400, which displays as 3.00 after rounding, so $50.00 is the largest whole-cent BVPS for the P/B to stay at or above 3.00.

Smallest whole-cent share price for the P/B to reach 2.00: At the displayed $100.00 the figures are Share price $100.00; book value per share $50.00; P/B ratio 2.00; share price needed for the 2.00 target $100.00; BVPS needed for the 2.00 target $50.00. At the displayed $100.00 the P/B is 2.00 (exactly 2.00). At $99.99 the price is 1 cent short of the $100.00 needed — and the unrounded P/B is 1.9998, which displays as 2.00 after rounding, so $100.00 is the smallest whole-cent share price for the P/B to reach 2.00.

Largest whole-cent BVPS for the P/B to STAY at or above 4.00: At the displayed $37.50 the figures are Share price $150.00; book value per share $37.50; P/B ratio 4.00; share price needed for the 4.00 target $150.00; BVPS needed for the 4.00 target $37.50. At the displayed $37.50 the P/B is 4.00 (exactly 4.00). At $37.51 the BVPS is 1 cent over the $37.50 needed — and the unrounded P/B is 3.998934, which displays as 4.00 after rounding, so $37.50 is the largest whole-cent BVPS for the P/B to stay at or above 4.00.

Smallest whole-cent share price for the P/B to reach 5.00: At the displayed $250.00 the figures are Share price $250.00; book value per share $50.00; P/B ratio 5.00; share price needed for the 5.00 target $250.00; BVPS needed for the 5.00 target $50.00. At the displayed $250.00 the P/B is 5.00 (exactly 5.00). At $249.99 the price is 1 cent short of the $250.00 needed — and the unrounded P/B is 4.9998, which displays as 5.00 after rounding, so $250.00 is the smallest whole-cent share price for the P/B to reach 5.00.

A warning about the neighbours: every neighbour above shows as the target when rounded to two decimals, but its unrounded P/B is a hair below the target. An investor underwriting on the unrounded P/B would still say no where the unrounded figure misses the line. The page prints the unrounded neighbour value in full so the rounding does not mislead you: 2.9998, 3.9998, 2.999400, 1.9998, 3.998934 and 4.9998.

What the defaults assume

The defaults are a $150.00 share price, $50.00 of book value per share and a target P/B of 4.00 — Share price $150.00; book value per share $50.00; P/B ratio 3.00; share price needed for the 4.00 target $200.00; BVPS needed for the 4.00 target $37.50. With Share price $180.00, Share price $180.00; book value per share $50.00; P/B ratio 3.60; share price needed for the 4.00 target $200.00; BVPS needed for the 4.00 target $45.00. With BVPS $60.00, Share price $150.00; book value per share $60.00; P/B ratio 2.50; share price needed for the 4.00 target $240.00; BVPS needed for the 4.00 target $37.50. With Share price $90.00, Share price $90.00; book value per share $50.00; P/B ratio 1.80; share price needed for the 4.00 target $200.00; BVPS needed for the 4.00 target $22.50. With BVPS $40.00, Share price $150.00; book value per share $40.00; P/B ratio 3.75; share price needed for the 4.00 target $160.00; BVPS needed for the 4.00 target $37.50. With Share price $75.00, Share price $75.00; book value per share $50.00; P/B ratio 1.50; share price needed for the 4.00 target $200.00; BVPS needed for the 4.00 target $18.75. With BVPS $0, Share price $150.00; book value per share $0.00; P/B ratio — (undefined: no book value to divide the price by); share price needed for the 4.00 target —; BVPS needed for the 4.00 target —. With What-if bars — Share price $200.00, BVPS $75.00, share price $100.00, share price $200.00: P/B 4.00; BVPS $75.00: P/B 2.00; share price $100.00: P/B 2.00. With BVPS $0, P/B ratio — (undefined: no book value to divide the price by). With Share price $0, P/B ratio 0.00. With Share price $149.99, P/B ratio 3.00. With BVPS $50.01, P/B ratio 3.00. With Share price $150.00, P/B ratio 3.00. With Share price $199.99, P/B ratio 4.00. With BVPS −$25.00, P/B ratio −6.00 (unrounded −6). With P/B bars, share price $200.00: P/B 4.00; BVPS $75.00: P/B 2.00; share price $100.00: P/B 2.00.

A note on the rounding: with a share price of $149.99 the unrounded P/B is 2.9998, which rounds half-up to 3.00 — but it is still below the 3.00 line. With BVPS of $50.01 the unrounded P/B is 2.999400, which rounds to 3.00. With a share price of $199.99 the unrounded P/B is 3.9998, which rounds half-up to 4.00 — but it is just below the 4.00 line. The page prints the unrounded values so the rounding does not mislead you.

Output · formula · meaning

Who uses this

• The investor checking a value stock before buying: they learn a $150.00 share price on $50.00 of book value per share is a 3.00 P/B — and they check the $200.00 reverse to see the share price a 4.00 P/B needs.
• The shareholder watching a bank stock: they learn banks and insurers are the classic P/B stocks — most of their value sits in financial assets that are marked close to book — and they check the $37.50 reverse to see the book value a 4.00 P/B needs.
• The value hunter comparing two stocks in one industry: they learn a 3.00 P/B in banking and a 3.00 P/B in software are different stories — and they check the $150.00 reverse to see the share price a 3.00 P/B needs.
• The student learning valuation ratios: they learn the P/B is the share price divided by the book value per share — the price you pay for each dollar of the company’s net assets — and they check the $100.00 reverse to see the share price a 2.00 P/B needs.

Accuracy & limitations

The math is first-principles: the P/B ratio is the share price ÷ book value per share; the share price needed at the target is the target P/B times the book value per share; the BVPS needed at the target is the share price divided by the target P/B — all rounded to two decimals half-up. The reverses are judged on the UNROUNDED P/B: a neighbour one cent short shows as the target when rounded to two decimals, but its unrounded P/B is below the target, so it does not meet the bar — the page prints the unrounded neighbour value in full. A negative P/B means negative book value: at −$25.00 of BVPS the P/B is −6.00 (unrounded −6) — a negative P/B means the company’s book value is negative — liabilities exceed assets, so the company owes more than it owns on paper — and a negative P/B is not a bargain signal, it is a distress signal — so the P/B is negative and the calculator shows the negative figure with a note, never hides it and never shows “—” for it. Zero book value is undefined: with no book value there is nothing to divide the price by, so the P/B ratio cannot be computed — the calculator shows “—” with a note, never Infinity or NaN. What the model cannot do is judge the stock: book value is backward-looking — assets sit on the books at what they cost, not what they would fetch today — so a P/B built on stale asset values is a P/B built on sand; compare P/Bs within one industry, because a 3.00 P/B in banking and a 3.00 P/B in software are different stories; and the P/B says nothing about earnings, cash flow or the quality of the assets. Use it to see the price you pay for each dollar of the company’s net assets — then read the rest of the accounts.

Frequently asked questions