The P/B ratio is also called the Price-To-Book ratio. It is a metric used by investors to determine if they would pay too much for the stock were the company to go immediately bankrupt. While it is a crude measurement, it is helpful for determining which companies are undervalued (and overvalued). If the P/B ratio is under 1.0, then it is generally believed that the stock is undervalued. If the ratio is anything above 1.0 then the stock is overvalued. Three stocks with currently low P/B ratios are Tesoro Corporation (NYSE:TSO), Deere & Company (NYSE:DE), and Allegheny Technologies Incorporated (NYSE:ATI).
Tesoro Corporation (NYSE:TSO) is the first stock to consider. It was at a price of $96.82 a share as of last close. Its price-to-book ratio is 2.68. That figure is below the industry average of 2.78. The sales have maintained at 19.20% a year, on average, as analyzed over the last five years. The EPS has been at an average growth rate of 53.80%.
Deere & Company (NYSE:DE) currently has a P/B ratio of 3.82, while the industry average is 1.88. It closed out at $93.11. The sales growth has been about 9.30% a year, typically, with the net income of the company moving forward by a rate that is about 33.20%.
Allegheny Technologies Incorporated (NYSE:ATI) is the third stock, with a low P/B ratio of 0.88. It is under the 0.74 industry average. The profit was down about -1.01% a year over the last five years, with sales growth declining over that same period to a rise of approximately -15.60% a year. The long-term trend for ATI shows it has been down since July 2 of this year, with a short-term down since August 11, 2015. Its year high was on May 15, when it was at 37.76, while the year’s low was on August 13 of this year, when it was 19.69.