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Zacks.com featured highlights General Motors, JD.com, Pfizer, StoneCo and Enersys
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For Immediate Release

Chicago, IL – April 10, 2025 – Stocks in this week’s article are General Motors Co. GM, JD.com JD, Pfizer PFE, StoneCo STNE and Enersys ENS.

5 Low Price-to-Book Stocks to Add to Your Portfolio This Spring

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.

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.

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 the book value of a stock. It is calculated by dividing the current closing price of the stock by the book value per share.

Here’s the formula of P/B ratio:

P/B ratio = market capitalization/book value of equity.

The P/B ratio helps identify low-priced stocks with high growth prospects. General Motors Co., JD.com, Pfizer, StoneCo and Enersys are some such stocks.

Now, let us understand the concept of book value.

What is 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.

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.

Understanding P/B Ratio

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.

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.

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.

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.

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