ValuratorExplore Company Valuations

Price-to-Book (P/B)

For informational and educational purposes only • Not investment advice.

Compare P/B valuations across companies

Nvidia
Estimated Fair Value$166.96
Current Price$229.28
Valuation Gap-27.2%
Historical Median P/B17.64x
Current P/B24.23x
Detailed valuation
Apple
Estimated Fair Value$271.63
Current Price$336.64
Valuation Gap-19.3%
Historical Median P/B37.10x
Current P/B45.99x
Detailed valuation
Alphabet
Estimated Fair Value$265.29
Current Price$351.66
Valuation Gap-24.6%
Historical Median P/B5.02x
Current P/B6.65x
Detailed valuation
Microsoft
Estimated Fair Value$642.97
Current Price$535.07
Valuation Gap20.2%
Historical Median P/B10.80x
Current P/B8.98x
Detailed valuation
Selected P/B Multiple

What is Price-to-Book (P/B) Valuation?

Price-to-Book (P/B) Valuation estimates a company's Fair Value based on its Book Value and the P/B multiple applied to that Book Value.

The P/B ratio compares a company's share price with its Book Value per Share. It shows how the market values the company relative to the net assets recorded on its balance sheet.

Historical P/B ratios show the valuation multiples at which the company has traded in the past. They can be used as a reference for estimating Fair Value from the company's Book Value per Share.

P/B Valuation is most useful for companies where Book Value is economically meaningful, such as banks, insurers and asset-heavy businesses.

How the P/B Model Works

The Price-to-Book model estimates fair value by calculating the company's historical P/B multiples, selecting a valuation P/B, and applying it to Book Value per Share.

Historical Book Value & Prices
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Calculate Historical P/B
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Select Valuation P/B
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Apply to Book Value per Share
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Fair Value per Share

P/B Formula

P/B Ratio=Share PriceBook Value per Share \text{P/B Ratio} = \frac{ \text{Share Price} }{ \text{Book Value per Share} }

Key Model Assumptions

• The company must have positive Book Value per Share.
• Historical P/B ratios are calculated only for years with valid positive Book Value per Share.
• The 10 most recent valid historical P/B ratios are used to estimate the company's typical valuation multiple.
• The historical median P/B forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the historical median P/B.
• Historical P/B multiples may not remain representative if the company's asset base, profitability or business model changes materially.

Step 1 — Calculate Historical P/B Ratios

Historical Book Value per Share = Historical Book Value / Historical Shares Outstanding

Historical P/B = Year-End Share Price / Historical Book Value per Share

Historical Median P/B = Median of the 10 most recent valid historical P/B ratios

The model calculates historical Book Value per Share and historical P/B ratios. The median of the 10 most recent valid P/B ratios is then used as the company's historical valuation benchmark.

Step 2 — Select the Valuation Multiple

Selected P/B = Historical Median P/B × Scenario Adjustment

The selected scenario adjusts the median historical P/B to determine the valuation multiple used to estimate Fair Value.

Step 3 — Estimate Fair Value per Share

Fair Value per Share = Book Value per Share × Selected P/B

The selected P/B multiple is applied to Book Value per Share to estimate Fair Value per Share.

Step 4 — Compare With the Current Market Valuation

Current P/B = Current Price / Book Value per Share

Valuation Gap = Fair Value per Share / Current Price − 1

Current P/B shows the multiple currently assigned to the company's Book Value, while the Valuation Gap compares the estimated Fair Value with the current stock price.