Price-To-Book (P/B) Ratio

The Price-to-Book Ratio is a financial metric used to compare a company's market value to its book value.

P/B Ratio = Market Price per Share / Book Value per Share

P/B Less Than 1: This suggests that the stock might be undervalued, or that the market perceives the company to have problems leading to its market value being less than its book value. However, it could also mean the company is not profitable or has other issues like declining business prospects or significant liabilities not fully reflected in book value.
P/B Greater Than 1: This implies that the stock is trading at a premium over its book value. Investors might see growth potential or believe the company has valuable intangible assets or earnings power that exceeds its net assets. High P/B ratios are common in industries where companies have significant intangible assets or where future earnings are expected to be high.
P/B = 1: The market price equals the book value, suggesting a fair valuation based on the company's assets, but this alone doesn't necessarily indicate whether the stock is a good investment.

While the P/B ratio can be a handy tool for investors, it should be used in conjunction with other financial ratios and qualitative factors for a comprehensive analysis of a company's valuation.