LOADING
A valuation ratio comparing a company's market price per share to its book value per share.
The P/B ratio indicates how much investors are paying relative to the company's net asset value. A P/B below 1.0 suggests the stock is trading below the value of its net assets, which could indicate undervaluation or underlying problems. Banks and insurance companies are commonly evaluated using P/B because their assets (loans, investments) are marked to market values. Technology companies often trade at P/B ratios of 5-20x because their most valuable assets (intellectual property, brand, network effects) are largely intangible and not fully reflected on the balance sheet. Benjamin Graham considered P/B an important value screen.