What is the P/B ratio?
P/B stands for price/book — the share price relative to the company's book equity per share, i.e. what the assets minus the debt are recorded at in the accounts. A P/B of 1 means you pay exactly what the company's assets are booked at. Below 1 you pay less; above 1 you pay more.
What "book value" is
Take everything the company owns — buildings, machines, cash, inventory — and subtract all the debt. What is left is the equity, also called book value. Divide by the number of shares and you have book value per share.
Example: Book value per share is 100. The share costs 150. P/B = 1.5. You pay 50% more than the assets are recorded at — typically because the company earns well on them.
When the number says a lot — and little
P/B is most useful for companies whose value is their assets: banks, insurers, property, shipping, industrials. Here a P/B below 1 means something: you are buying the assets at a discount. Then ask why the market gives the discount — often because the assets are worth less than the accounts say, or because the company earns too little on them.
For software, pharma and brand companies, P/B says almost nothing. Their value is patents, brands and people — things that are not in the books. A P/B of 10 or 20 is normal there and does not mean the stock is expensive.
The typical beginner's mistake
Comparing P/B across industries. A bank at P/B 0.8 and a software company at P/B 12 can both be fairly priced. The number only makes sense against companies that own the same kind of things.
How you see it in Kiggo
Kiggo fetches P/B as one of the accounting figures that feed the long-term verdict — the "Long term (years)" ring on the stock page. Tap the ring and Kiggo explains which figures it is built on and why. The number is not shown on its own, because it is so easily misread across industries.
Related terms
Frequently asked questions
Is P/B below 1 a buy signal?
No — it is a question. The market thinks the assets are worth less than booked, or that the company earns too little on them. Sometimes the market is wrong. Often it is not.
Can P/B be negative?
Yes, if debt exceeds assets, equity is negative. Then the number is useless — and that in itself is worth knowing.
Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated 2026-09-07.
Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.
