PBR
Price-to-Book Ratio. The share price divided by book value per share, used to gauge under- or overvaluation against book equity
PBR (Price-to-Book Ratio) is the share price divided by book value per share (BPS), or equivalently, market capitalization divided by net assets. It indicates how many multiples of book equity the market is paying. A PBR below 1.0 means the market values the company below its accounting net asset value - in theory, shareholders would receive more by liquidating. The Japanese market has historically had a high share of sub-1.0 PBR companies, which led the Tokyo Stock Exchange in 2023 to request 'management with awareness of cost of capital and stock price.'
Calculation
PBR is calculated as 'share price / BPS' or 'market cap / net assets.' For example, with a share price of 1,500 yen and BPS of 1,000 yen, PBR is 1.5x. BPS is computed from the most recent earnings disclosure or annual report by dividing net assets by shares outstanding. Treatment of treasury shares, preferred stock, and consolidation adjustments can differ across data sources (broker pages, Bloomberg, QUICK), so figures may vary slightly by provider.
Sector-Appropriate Levels
Reasonable PBR levels vary widely by sector. Banks operate under regulatory capital constraints with structurally lower ROE, so PBR ranges of 0.5-0.8x are typical. Cyclical sectors like steel and shipping also tend to trade between 0.8-1.2x over long periods. Intangible-heavy sectors such as IT services and branded consumer goods commonly trade at 3-10x PBR or higher. Comparing PBR against same-sector peers and against the company's own 5-10 year PBR range is more useful than relying on absolute levels.
Relation to ROE (Dupont)
Mathematically, PBR equals ROE multiplied by PER (with ROE = net income / net assets and PER = share price / EPS). Companies with high ROE tend to have high PBR, while structurally low-ROE companies have low PBR. The 2023 TSE request explicitly tied chronic low PBR to low ROE and prompted firms to lift ROE via buybacks and portfolio restructuring. When using PBR, always evaluate it together with ROE to avoid value traps where 'low ROE × low PBR' is structural rather than mispriced.