What it tells you:

The P/E ratio shows how much investors are willing to pay for each dollar of a company’s earnings.

A high P/E may indicate that investors expect high growth in the future.

A low P/E might suggest the stock is undervalued or that the company is facing difficulties. What it tells you:

The P/B ratio compares a company’s market value to its book value (net asset value).

A P/B < 1 may mean the stock is undervalued (you’re paying less than the company’s net worth).

A P/B > 1 often suggests the market expects future growth or profitability beyond the current assets.