What is the price-to-book ratio?

How it is calculated

Book value is equity: assets minus liabilities, what the accounts say belongs to the owners. Exxon Mobil: $165.87 / $65.16 per share = 2.55.

P/B for the largest companies right now

Left out: Berkshire Hathaway. The book value per share we hold is for another share class than the price, so the number would be wrong.

Why most are above 1

Equity is a value in the accounts, not a price. Machines sit there at what they cost, less depreciation. Knowledge, customers and brands a company built itself are mostly not there at all.

Exxon Mobil owns oil fields, refineries and ships, so much of what it does is on the balance sheet, and it is at 2.55. A card network has few such assets, and the value lies in the network.

Low and very high

Banks. JPMorgan Chase is at 2.53. A bank's assets are mostly loans and securities, close to what they are worth, which is why P/B is a common measure for banks in particular.

Buybacks. Mastercard is at 84.30. When a company buys back its shares, the money leaves equity. So equity shrinks and P/B rises, with nothing else changed. A company can buy back so much that equity turns negative, and then P/B means nothing at all.

P/B and return go together

A company that earns a lot on its equity often gets a high P/B, so read it next to return on equity. A P/B under 1 can mean the market doubts the book values or expects a low return, but the number doesn't say which.

More numbers are on Exxon Mobil's stock page.