Low Price-to-Book (P/B) Stocks
100 stocks · Updated May 9, 2026
The price-to-book ratio compares market cap to the accounting book value of equity — assets minus liabilities. A P/B below 1 means the stock trades below the liquidation value of its net assets, representing a classic Ben Graham value signal. Banks and financial institutions are most naturally analyzed on P/B, while the metric is less meaningful for asset-light businesses where intangible assets (brand, software, intellectual property) dwarf the book value of tangible assets.
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Frequently Asked Questions
What does a P/B below 1 mean?
A P/B below 1 means the stock trades below the accounting value of the company's net assets. This suggests the market believes the assets will generate returns below their book value, or that the assets are overvalued on the balance sheet.
In which sectors is P/B most useful?
P/B is most useful for banks, insurance companies, and other financial institutions whose primary assets are financial in nature and reliably valued. For technology and consumer companies with large intangible assets, P/B understates true economic book value.
Can a P/B below 1 be a value trap?
Yes — a stock can trade below book value because the assets are genuinely impaired, the business is structurally declining, or management is destroying value. Book value can also be misleading if assets carry inflated accounting values not reflective of market reality.
How does ROE relate to P/B?
Companies with high ROE deserve high P/B multiples — they are generating exceptional returns on the equity base. The relationship P/B = ROE / (required return) links the two metrics: high ROE justifies high P/B, low ROE is only worth low P/B.