What Is a Price to Book Growth (PBG) Calculator?

A PBG calculator divides a company's price-to-book multiple by its rate of growth, the same way the PEG ratio divides price-to-earnings by growth. The purpose is to avoid paying twice for expansion: a bank growing book value quickly legitimately trades at a higher multiple than a stagnant peer, and dividing by growth puts the two on a comparable footing.

The measure is most useful for businesses where book value means something — lenders, insurers, and capital-intensive operators whose equity reflects real productive assets. For asset-light companies most of the value is intangible and never appears on the balance sheet, which makes the multiple noisy and the growth-adjusted version noisier still.

How It Works

The calculator first finds price-to-book by dividing the share price by book value per share. It then divides that multiple by the expected growth rate to produce PBG. Because dividends also contribute to the return an investor receives, a second version divides the multiple by growth plus dividend yield, giving a total-return-adjusted reading that is fairer to income-paying companies.

A benchmark field turns the ratio into a valuation tool. Multiplying book value per share by growth and by the benchmark PBG gives the price at which this company would trade in line with your reference level. The difference between that figure and today's price is the premium or discount you are paying for the growth on offer.

Understanding Your Results

The primary card reports the PBG ratio with the underlying book multiple and growth rate stated beside it. The three-stat bar shows price-to-book, the benchmark fair value and the implied upside or downside, while the table walks through the multiple, the dividend-adjusted version and the premium being paid.

Compare the raw and dividend-adjusted readings. A wide gap means a meaningful share of the expected return is coming from cash distributions rather than reinvested book growth, which is a lower-risk profile and deserves a different benchmark. If the two readings are similar, the entire case rests on reinvestment doing the work.

Finally, keep the growth assumption honest. PBG is extremely sensitive to it, and a company that grew book value quickly during a boom may not repeat that performance. Check whether growth came from retained earnings or from issuing shares and acquisitions, since only the former reliably compounds per-share value. When growth is uncertain, a lower multiple is the only real protection. It also pays to pair PBG with a quality check on returns on equity, because book value can grow simply by retaining earnings in a mediocre business without improving the return those assets generate. Growth in equity that comes from a company earning well above its cost of capital is worth a premium; growth produced by a business barely covering its capital costs is not, and the multiple alone cannot tell the two apart. Read the ratio as a screening filter, then confirm that the underlying growth is genuinely profitable before acting on the ratio in any way.