For example, a stock with a P/B ratio of 2 means that we pay $2 for every $1 of book value. Thus, the higher the P/B, the more expensive the stock.

A P/B ratio of less than one means that the stock is trading at less than its book value or the stock is undervalued and, therefore, a good buy. Conversely, a stock with a ratio greater than one can be interpreted as being overvalued or relatively expensive.

By comparing the book value of equity to its market price, we get an idea of whether a company is under- or overpriced. However, like P/E or P/S ratio, it is always better to compare P/B ratios within industries.

It is calculated by subtracting total liabilities from the total assets of a company. In most cases, this equates to common stockholders’ equity on the balance sheet. However, depending on the company’s balance sheet, intangible assets should also be subtracted from the total assets to determine book value.

There are several ways by which book value can be defined. Book value is the total value that would be left over, according to the company’s balance sheet, if it goes bankrupt immediately. In other words, this is what shareholders would theoretically receive if a company liquidates all its assets after paying off all its liabilities.

Now, let us understand the concept of book value.

The P/B ratio helps identify low-priced stocks with high growth prospects. CVS Health , Signet Jewelers , KB Financial Group , Affiliated Managers Group and PagSeguro Digital are some such stocks.

While considering valuation metrics, though price-to-earnings and price-to-sales are the first choices, the P/B ratio is also emerging as a convenient tool for identifying low-priced stocks that have high-growth prospects.

In value investing, it is a common practice to pick stocks that are cheap but fundamentally strong. There are a number of investment styles for finding great stocks at attractive values.

Price-to-book ratio or P/B ratio is essentially the ratio of stock price to book value, i.e., how much an investor needs to pay for each dollar of book value of a stock. It is calculated by dividing the current closing price of the stock by the latest quarter’s book value per share.

Chicago, IL – July 23, 2025 – The stocks in this week’s article are CVS Health CVS, Signet Jewelers SIG, KB Financial Group KB, Affiliated Managers Group AMG and PagSeguro Digital PAGS.

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But there is a warning. A P/B ratio of less than one can also mean that the company is earning weak or even negative returns on its assets or that the assets are overstated. In such a case, the stock should be shunned because it may be destroying shareholder value. Conversely, the stock’s price may be significantly high — thereby pushing the P/B ratio to more than one — in the likely case that it has become a takeover target, a good enough reason to own the stock.

Moreover, the P/B ratio is not without limitations. It is useful for businesses like finance, investments, insurance and banking or manufacturing companies with many liquid/tangible assets on the books. However, it can be misleading for firms with significant R&D expenditure, high debt, service companies, or those with negative earnings.

In any case, the ratio is not particularly relevant as a standalone number. One should analyze other ratios like P/E, P/S and debt to equity before arriving at a reasonable investment decision.

5 Low Price-to-Book Stocks

Here are five of the 18 stocks that qualified the screening:

Headquartered in Woonsocket, RI, CVS Health (formerly known as CVS Caremark Corporation) is a pharmacy innovation company with integrated offerings across the entire spectrum of pharmacy care.

CVS Health presently has a Zacks Rank #2 and a Value Score of A. The company has a projected 3-5-year EPS growth rate of 11.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hamilton, Bermuda-based Signet is a retailer of diamond jewelry, watches and other products. The company operates in the United States, Canada, the U.K., the Republic of Ireland and the Channel Islands. It is often considered to be the leading retailer of diamond jewelry.

Signet has a projected 3-5-year EPS growth rate of 12.2%.

SIG has a Value Score of A and a Zacks Rank #2 at present

KB Financial Group is a commercial bank in Korea. The company provides credit and related financial services mainly to individuals and small and medium-sized enterprises. It also provides a range of deposit products and related services to individuals and enterprises of all sizes.

KB Financial Group has a projected 3-5-year EPS growth rate of 12.33%. KB currently has a Zacks Rank #2 and a Value Score of B.

Headquartered in Massachusetts, Affiliated Managers Group is a global asset manager with equity investments in a large group of investment management firms or affiliates. On the whole, the affiliates manage more than 500 investment products across each major product category — global, international and emerging markets equities, domestic equities, and alternative and fixed-income products.

Affiliated Managers Group has a Zacks Rank #2 and a Value Score of A at present. AMG has a projected 3-5-year EPS growth rate of 14.2%.

PagSeguro Digital provides financial technology solutions and services for micro-merchants and small and medium-sized businesses primarily in Brazil and internationally. The company offers multiple digital payment solutions, in-person payments via point-of-sales devices and prepaid card services. PagSeguro Digital is headquartered in Sao Paulo, Brazil.

PagSeguro Digital has a projected 3-5-year EPS growth rate of 11.3%. PAGS currently has a Zacks Rank #1 and a Value Score of A.

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CVS Health Corporation (CVS) : Free Stock Analysis Report

Signet Jewelers Limited (SIG) : Free Stock Analysis Report

Affiliated Managers Group, Inc. (AMG) : Free Stock Analysis Report

KB Financial Group Inc (KB) : Free Stock Analysis Report

PagSeguro Digital Ltd. (PAGS) : Free Stock Analysis Report

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