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Price-to-Book Ratio (P/B) Explained

Q: Why is P/B especially important for banks?

Because a bank's balance sheet consists largely of measurable financial assets, book value is especially meaningful there, unlike for companies with many intangible assets.

The price-to-book ratio (P/B) relates a stock's price to its book value per share. It shows how much investors are currently paying for each euro of book equity.

Updated 20266 min read

Formula

P/B = Share price ÷ Book value per share

< 1.5Attractive valuation

1.5–3.0Moderate valuation

> 3.0High valuation

Guideline values, industry-dependent, illustrative

The formula in detail

The components of the formula at a glance.

Numerator

Share price

The stock's current market price.

Denominator

Book value per share

Book equity divided by the number of shares outstanding.

P/B calculator

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Share price (€)

Book value per share (€)

Result P/B

Moderate valuation

2.0

A P/B below 1.5 can point to an attractive valuation relative to book value (a classic value-investing signal).

A P/B above 3.0 usually prices in intangible value such as brand, patents or growth expectations that aren't on the balance sheet.

For financials (banks, insurers) P/B is traditionally especially meaningful, since their balance sheet consists largely of measurable financial assets.

Typical industry ranges

Typical value range per sector, for orientation.

Technology

3.0–11.0

Healthcare

2.2–6.8

Industrials

1.6–6.1

Consumer Defensive

1.8–6.0

Communication Services

1.6–4.6

Consumer Cyclical

1.2–6.6

Energy

1.3–3.1

Basic Materials

1.3–3.2

Utilities

1.4–2.6

Financial Services

1.3–2.9

Real Estate

0.9–1.6

Aggregated sector values (median band). Data as of Nov 15, 2026

Threshold slider

How many sectors meet a threshold?

Move the threshold and see how many of the sectors shown above sit below or above it with their median.

Bounded preview

Threshold for P/B2.5

Comparison

6 of 11 sectors meet the thresholdBased on the aggregated sector medians above, not on individual companies.

What the metric looks like at large companies

Data as of Nov 15, 2026

Name	Sector	Value	Sector median
Apple Inc.	Technology	46.5	5.5
Alphabet Inc Class A	Communication Services	5.4	2.5
Amazon.com Inc	Consumer Cyclical	4.7	2.5
Space Exploration Technologies Corp. Class A Common Stock	Industrials	6.6	2.8
Saudi Aramco	Energy	3.9	2.2
Eli Lilly and Company	Healthcare	32.0	4.6

Selection: the company with the highest market cap in each sector. Not a recommendation, only worked examples with real values.

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Used in these strategies

Magic Formula: Value + QualityGood companies at cheap prices: two factors, one score.

Frequently asked questions

What is a good P/B ratio?

As a rough guideline, a P/B below 1.5 counts as attractive and above 3.0 as high. What matters most is always the industry comparison and the share of intangible assets in the business model.

Why is P/B especially important for banks?

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Not investment advice. This explanation is for informational purposes only and does not constitute a recommendation to buy or sell securities.