The Price-to-Book ratio compares a company's market capitalisation to its book value (total assets minus liabilities). A P/B below 1.0 may indicate the stock is undervalued relative to its net assets, while a high P/B suggests the market expects strong future growth.
Example
“A bank stock trading at $30 per share with a book value of $25 per share has a P/B ratio of 1.2, suggesting investors are paying a modest premium over the company's net asset value.”