What Is the P/B Ratio? Formula, Meaning of 1x and Interpretation
The price-to-book ratio shows how many times a company's book value per share investors are paying for its stock. Trading below 1x does not automatically mean cheap: profitability, asset quality and future growth matter.
P/B ratio formula
PBR = Share price ÷ Book value per share (BPS)
If a share trades at 3,000 and BPS is 2,500 in the same currency, P/B is 3,000 ÷ 2,500 = 1.2x. With consistent share counts, market capitalisation ÷ common equity expresses the same relationship.
Calculate P/B
Use the same currency for price and BPS
Result
3000 ÷ 2500
1.20x
Current P/B levels in Japan
Price date: October 20, 2026
P/B median
1.22x
Based on the latest close and BPS
25th percentile
0.78x
25% of valid stocks are at or below this level
75th percentile
2.18x
75% of valid stocks are at or below this level
Stocks with valid P/B
3,772 / 3,958
186 stocks excluded for non-positive or missing BPS
P/B distribution
Read this with the median and quartiles, which are less sensitive to extreme values.
Stocks trading below 1x book
Japanese stocks whose share price is below book value per share among stocks with valid P/B.
1,465stocks
38.8%
Below 1x can flag a value candidate, but may also price in weak profitability, poor asset quality or future write-downs.
Median P/B by sector
Sectors with at least 10 valid stocks. Asset mix and profitability differ, so peer comparison should come first.
Examples from large-cap stocks
This is not a recommendation ranking. It shows how share price and BPS combine to produce P/B.
- Price
- ¥3,351-3.65%
- BPS
- ¥2,016.67
- PBR
- 1.66x
- Price
- ¥3,102+0.00%
- BPS
- ¥3,150.6
- PBR
- 0.98x
- Price
- ¥18,800+0.13%
- BPS
- ¥1,274.76
- PBR
- 14.75x
- Price
- ¥5,810+0.64%
- BPS
- ¥1,470.31
- PBR
- 3.95x
- Price
- ¥4,554-6.01%
- BPS
- ¥3,232.37
- PBR
- 1.41x
- Price
- ¥33,870-1.68%
- BPS
- ¥1,440.18
- PBR
- 23.52x
- Price
- ¥3,148-3.85%
- BPS
- ¥2,119.26
- PBR
- 1.49x
- Price
- ¥3,960+0.00%
- BPS
- ¥1,425.17
- PBR
- 2.78x
What the 1x P/B threshold means
At 1x, the share price equals accounting book value per share.
- Below 1x
- What it indicates
- Price is below BPS
- What to check
- Whether low ROE, write-downs or contraction justify the discount
- Around 1x
- What it indicates
- Price and BPS are similar
- What to check
- Whether profitability can improve above the cost of capital
- Above 1x
- What it indicates
- The market values the business above book
- What to check
- Whether high ROE, growth and intangible value can persist
How to read high and low P/B
When P/B is low
The price is low relative to book value, which can look cheap. It may also reflect low ROE, idle assets, expected losses or write-downs, or weak capital returns.
When P/B is high
The market may be valuing high ROE, growth, brands or technology that accounting book value misses. Because the premium can shrink with profitability, test whether ROE is sustainable.
A practical comparison order
- 1Compare with the same sector
- 2Compare with the stock's own history
- 3Pair with ROE and earnings growth
- 4Review asset quality and capital returns
How P/B relates to P/E and ROE
PBR = PER × ROE
When earnings and equity bases align and ROE is expressed as a decimal
Breaking P/B into P/E and ROE helps explain why it is low. Low P/B with high ROE may indicate a low earnings valuation, while low ROE can mean the company is not turning its equity into enough profit.
Low P/B × high ROE
Valuation may be low relative to profitability
Low P/B × low ROE
Capital efficiency may need improvement
High P/B × high ROE
The market prices in sustained profitability
When P/B is not useful
- BPS is zero or negative because the company has negative equity
- Property or securities differ materially between book and realisable value
- Brands, software or customer relationships drive value but are largely absent from book value
- Large losses or new share issuance have just changed BPS sharply
Metrics to use alongside P/B
ROE / PER / ROA / FCF / Equity ratio
Combine book value with the company's ability to generate profit and cash, plus balance-sheet resilience.
How Stock Club calculates and aggregates P/B
- P/B uses the latest closing price in the numerator and the latest BPS in the denominator.
- BPS is based on equity attributable to common shareholders and uses disclosed BPS to reflect preferred claims where needed.
- Share price and BPS are aligned for stock splits.
- Market statistics cover active Japanese EQUITY records and exclude ETFs and REITs.
- Zero, negative and missing P/B values are excluded from quartiles and distributions.
- Prices are not real time; the applicable date appears with the market data.
This page is for information only and does not recommend any security. Do not make investment decisions from a single displayed metric; review company disclosures and current information.
P/B ratio FAQ
What P/B ratio is considered cheap?
Below 1x is often treated as an asset-value candidate because price is below book value per share. It can also reflect weak profitability or write-down risk, so compare peers and check ROE.
What does a P/B ratio below 1x mean?
The share price is below accounting book value per share. It does not guarantee a gain from liquidation because realisable asset values, liabilities, costs and the going-concern assumption differ.
Why can P/B be negative?
BPS is negative when liabilities exceed assets. A negative multiple is not useful for comparison, so it is normally shown as N/A while investors assess solvency and the path out of negative equity.
Does a high P/B mean a stock is expensive?
Not necessarily. High ROE, growth expectations and intangible value such as brands or technology can support a high P/B. The key question is whether that profitability can persist.
How should I use P/E and P/B together?
P/E compares price with earnings, while P/B compares price with book value. P/B can remain usable when losses make P/E unavailable, but not when book value is non-positive. Pair both with ROE and growth.
Put P/B into practice
Use Stock Club's screener to combine P/B, P/E, ROE and growth metrics across Japanese and US stocks.