What Is a Good Price-to-Book Ratio?
A good price-to-book ratio has no single number: a P/B under 1 means the stock trades below the accounting value of its net assets, but what counts as low depends on the business. Banks sit near 1.3 and tech stocks near 12, so the same ratio means different things in different sectors.
On this site's data the median stock trades at about 4.2 times book (as of October 24, 2026). The ratio works best for banks and asset-heavy firms and misleads for asset-light and buyback-heavy ones.
What is book value and how is price-to-book calculated?
Book value is total assets minus total liabilities, the equity on the balance sheet. Divide the share price by book value per share and you have price-to-book. A stock at $30 with $20 of book value per share has a P/B of 1.5.
Book value is an accounting record of what was paid for assets, less what has been written off. It is not what the company would fetch if sold. See Price/Book in the glossary.
How does P/B differ across sectors?
Median P/B on this site's data ranges from 1.3 for banks to 28.8 for hotels, restaurants and leisure companies:
Median P/B of stocks with a positive P/B in each sector, as of October 24, 2026. Stock counts are in brackets.
The pattern is not that banks are cheap and tech is dear. A bank's balance sheet is the business: loans and securities. A software firm's value sits in code, brands and customers, which accounting mostly leaves off the balance sheet.
What are the common P/B reference points?
| P/B level | Stocks (of 500) | What it is, and its caveat |
|---|---|---|
| Under 1 | 12 | Price below book value. The assets may be worth less than carried, as with loans that will not be repaid. |
| Under 1.5 | 58 | The ceiling in Benjamin Graham's classic defensive rule (with a P/E of 15 or less, a product of 22.5). It was written for asset-heavy companies and screens out most asset-light ones. |
| Under 3 | 198 | Roughly where the bank, insurer and energy medians above sit. A marker, not a rule. |
| Under 8 | 347 | This site's own filter, one of the 8 baseline filters. It screens out the extremes, not the cheap. |
| Over 15 | 88 | Usually a high-return, asset-light business or one with shrunken equity after years of buybacks. |
Graham's rule is described, for example, in this explainer of the Graham number. The screener uses under 8 as a pass mark in its stock card; it is a guard against paying a huge multiple of equity, not a measure of value.
Why does P/B mislead for asset-light and buyback-heavy companies?
Equity falls when a company buys back stock or pays dividends beyond its profit, and it never counts brand or software as an asset. The result is a P/B that says nothing about price. As of the data date:
- Philip Morris (PM) shows a P/B of 2,782, McDonald's (MCD) 276 and AutoZone (AZO) 875.
- Apple (AAPL) shows 47 and Mastercard (MA) 97, with returns on equity of 137% and 232%.
- Three stocks have no P/B at all in the data, because a negative book value gives no usable ratio.
These are profitable, cash-generating firms, so a huge P/B is not a warning. It means book value is too small to be the denominator. To see how buybacks reshape the balance sheet, read what 15 years of buybacks really did.
How are P/B, P/E and return on equity linked?
P/B is roughly P/E multiplied by return on equity. JPMorgan (JPM) has a P/E of 13.3 and an ROE of 17.9%, and 13.3 times 0.179 is 2.4, its P/B. Bank of America (BAC) does the same sum: 10.9 times 0.107 is 1.2.
This is why a low P/B alone tells you little: a bank at 1.2 with a 10.7% ROE and one at 2.4 with 17.9% are priced in line with what they earn on their equity. Pair P/B with ROE, and with the P/E ratio. For a return measure that ignores how the company is financed, see what is ROIC.
Price-to-book FAQ
Is a low price-to-book ratio good?
A low P/B means you pay little for each dollar of accounting equity, but it is only good if that equity is real and earns a return. A bank at 0.9 times book may hold loans that will lose money, so a low ratio is a question to answer, not a conclusion.
What does a price-to-book ratio under 1 mean?
The stock trades for less than the accounting value of its net assets per share. As of October 24, 2026, 12 of the 500 stocks with a P/B in this site's data are below 1, including Citigroup at 0.97 and Comcast at 0.87.
Can price-to-book be negative?
Yes, when a company's liabilities exceed its assets, which buybacks and large dividends can cause. A negative P/B has no useful meaning, so data feeds usually leave it blank; 3 of 503 stocks here have no P/B.
Why do banks use price-to-book?
A bank's assets are mostly loans and securities rather than brands or software, so book value is a closer measure of what it owns. P/B together with return on equity is the standard pair for judging a bank.
What is the difference between P/B and P/E?
P/B compares price with accounting equity, P/E compares price with annual profit. They are linked: P/B is roughly P/E multiplied by return on equity.
This is educational analysis, not investment advice.