The P/B ratio is a shorthand form of price-to-book ratio. It is a measurement tool used to determine whether a stock is undervalued, which investors will look at before deciding what stock to buy into on a particular day. The ratio indicates whether a company’s asset value is comparable to its stock’s market value. A P/B ratio under 1.0 can mean a stock is undervalued, while being above 1.0 indicates an overvalued stock. Three stocks with low price-to-book ratios right now are Ocwen Financial Corp (NYSE:OCN), Yamana Gold Inc. (USA) (NYSE:AUY), and Peabody Energy Corporation (NYSE:BTU).
Ocwen Financial Corp (NYSE:OCN) is the first stock to consider. It has a P/B ratio of 0.28, which is much lower than the industry average of 1.31. Its price growth is -0.47% so far in 2015, while the last traded price was at $8.47 per share. Looking back over the last five year, sales were at 40.90% a year, on average. The EPS movement was about 26.95% for growth rate.
The second stock to analyse is Yamana Gold Inc. (USA) (NYSE:AUY). It keeps a P/B ratio that is below the industry average. Over the past five years, the sales growth for the company, as shown over the entire year, has been above 9.20% typically. As for the earnings per share for the company, that number has declined by about -57.50% for its rate.
Peabody Energy Corporation (NYSE:BTU) had a price of $1.09 at its last close. The price-to-book ratio was 0.18, which was far below the industry average of 1.76. It has had sales growth of 3.00% a year, typically, with net income for the company decreasing by about -30.50% a year.
To find value of stocks, the P/B ratio is very helpful for investors to look at before making decisions. It is a simple way to tell value.