Price to Tangible Book Value (PTBV)

What PTBV measures

Price to tangible book value (PTBV) is a valuation ratio that compares a company’s market price per share to the value of its tangible equity per share. Tangible equity excludes intangible assets such as goodwill, patents, trademarks, and other intellectual property. PTBV aims to show how the market values a company’s hard assets relative to the amount shareholders would theoretically receive if the company sold all physical assets and paid its debts.

Key takeaways

• PTBV focuses on physical, or “hard,” assets (inventory, machinery, buildings, vehicles).
• It is most useful for capital-intensive businesses (manufacturing, mining, energy).
• PTBV is less meaningful for firms whose value primarily derives from intangibles (software, brands, patents).
• A low PTBV can signal undervaluation or underlying problems; a high PTBV suggests the market pays a premium above tangible liquidation value.
• PTBV rests on accounting values, which may not reflect current market values for long-held assets.

Formula and components

PTBV = Share price / Tangible book value per share

Where:
* Share price = current market price per share.
* Tangible book value per share (TBVPS) = Total tangible net assets ÷ Shares outstanding.

Total tangible net assets are generally calculated as shareholders’ equity minus intangible assets (including goodwill). In practice, TBVPS can be derived from the balance sheet as:
Tangible equity = Total assets − Total liabilities − Intangible assets

When to use PTBV

Use PTBV when evaluating companies with significant physical assets:
* Manufacturers and automakers
* Mining and natural resource companies
* Oil and gas refiners
* Real-asset-heavy industrial firms

Avoid relying on PTBV for companies whose primary value is intangible (many modern tech, biotech, or service firms), since excluding intangibles would understate their true worth.

Limitations and caveats

• Accounting values: Balance-sheet figures reflect historical cost, not current market values; land or long-held assets may be understated.
• Liquidity and liquidation assumptions: TBV assumes assets can be sold at book value and that liquidation proceeds are distributed to shareholders—both of which may be unrealistic.
• Creditors’ priority: Shareholders are paid last in a liquidation, so TBV per share is a rough floor, not a guaranteed recovery.
• Industry context: PTBV should be compared to peers and tracked over time rather than used in isolation.

Example

Using a simplified example:
* Tangible book value (total tangible net assets) = $71 billion
* Shares outstanding = 1.4 billion
TBVPS = $71B ÷ 1.4B = $50.70

If the market price per share is $35.72, then:
PTBV = $35.72 ÷ $50.70 ≈ 0.70

A PTBV below 1.0 suggests the stock trades below its tangible book value per share, but further analysis is needed to determine whether this reflects genuine undervaluation or company-specific risks.

PTBV versus price-to-book (P/B)

PTBV is similar to the price-to-book ratio but excludes intangible assets. P/B compares market price to total book value (including intangibles), while PTBV removes intangibles to focus on hard, tangible equity. Choose the metric that best matches the nature of the company’s assets.

Bottom line

PTBV is a straightforward tool to assess how the market values a company’s tangible net assets relative to its share price. It is most informative for capital-intensive businesses with significant physical assets and less useful for firms whose value comes from intangible assets. Use PTBV alongside other ratios and qualitative analysis to form a fuller picture of valuation.