Beyond Standard Metrics: The Case for Price-to-Book Stock Screening in February 2026

The quest for undervalued stocks demands more than surface-level analysis. Most investors begin their search by examining familiar metrics like earnings per share growth and sales momentum. Yet one of the most powerful yet overlooked tools for uncovering bargains lies in a different direction: the price-to-book (P/B) ratio. When calculated and compared thoughtfully within industry contexts, this metric can reveal stocks trading at substantial discounts to their underlying asset values — signaling potential opportunities that more popular valuation methods might miss.

Understanding why P/B deserves a place in your screening toolkit requires looking beyond the conventional wisdom that dominates investment discourse today. While price-to-earnings and price-to-sales ratios have dominated discussions for years, the P/B ratio offers a complementary lens that proves especially valuable for identifying attractively priced stocks with solid growth trajectories.

Understanding Book Value: The Foundation of the P/B Approach

Before diving into how to use the P/B ratio effectively, it’s essential to grasp what “book value” actually represents. In fundamental terms, book value reflects what shareholders would theoretically receive if a company liquidated immediately — essentially, total assets minus all liabilities. On a company’s balance sheet, this typically corresponds to common stockholders’ equity.

The calculation is straightforward: subtract the company’s total liabilities from its total assets. In most cases, this delivers the common equity figure. However, for a more refined analysis, intangible assets should also be excluded from total assets to arrive at a true book value figure. This distinction becomes particularly important when evaluating companies with significant goodwill or intellectual property on their books.

The Price-to-Book Ratio Explained: Reading the Signal

The P/B ratio itself is elegantly simple: divide market capitalization by book value of equity. This single number tells you whether the market is pricing a company at a premium or discount relative to its tangible asset base.

When a stock trades with a P/B ratio below 1.0, it means you’re purchasing each dollar of underlying equity for less than $1 — a potential bargain signal. A ratio above 1.0 indicates you’re paying a premium; a P/B of 2.0, for example, means paying $2 for every $1 of book value. Generally, the lower the ratio, the cheaper the stock appears relative to its asset foundation.

However, interpreting this signal requires nuance. A depressed P/B can reflect genuine opportunity, or it can signal serious problems. A company earning weak or negative returns on its assets, or one with inflated asset values, may deserve its discount. In such cases, the low P/B isn’t a bargain — it’s a warning. Conversely, a high P/B isn’t always a red flag; companies trading at significant premiums might command that valuation because they’ve become acquisition targets or possess other strategic value.

Another critical consideration: P/B ratios work best for asset-heavy industries like banking, insurance, manufacturing, and finance. They can mislead when applied to firms with substantial research and development spending, high debt loads, service-oriented businesses, or companies operating in loss positions. This is precisely why combining P/B with complementary metrics — P/E ratios, price-to-sales figures, and debt-to-equity assessments — produces more reliable conclusions.

Building a Robust Stock Screening Framework

Identifying stocks worthy of deeper analysis requires establishing clear, systematic criteria. Relying on P/B alone would be myopic; instead, successful screening integrates multiple dimensions:

Valuation Foundation: Filter for stocks with price-to-book ratios below their industry medians, indicating relative undervaluation. Similarly, price-to-sales ratios below industry averages suggest the market underestimates the company’s revenue-generating capacity. Forward-looking P/E multiples (using analyst estimates) below industry medians add another layer of confidence.

Growth Confirmation: A P/B ratio of less than 1.0 matters far more when paired with evidence of meaningful growth ahead. The PEG ratio — which links the P/E multiple to projected earnings growth — becomes invaluable here. A PEG below 1.0 signals that investors are paying less than the company’s growth rate warrants, a classic value-with-growth scenario.

Liquidity Assurance: Stocks must trade above $5 per share and maintain average daily volumes of at least 100,000 shares. These thresholds ensure you can actually build or exit positions without market friction.

Quality Confirmation: The Zacks Rank system provides another filtering layer, with ranks of #1 (Strong Buy) or #2 (Buy) indicating stocks positioned to outperform across market environments. When combined with a Value Score of A or B, these stocks have historically demonstrated superior risk-adjusted returns for value-oriented investors.

Five Opportunities Emerging from the Criteria

Applying these comprehensive criteria in February 2026 reveals several compelling candidates, each demonstrating why thoughtful metric combinations matter more than any single ratio.

Invesco Ltd (ticker: IVZ), headquartered in Atlanta, operates as a global investment manager offering diverse products and services. Trading with a Zacks Rank of #1 and a Value Score of B, IVZ projects 3-5 year earnings per share growth of 20.9%, demonstrating that its low P/B valuation sits alongside genuine earnings momentum.

Harmony Biosciences (ticker: HRMY), based in Plymouth Meeting, Pennsylvania, develops treatments for rare neurological disorders. With a Zacks Rank of #1 and the highest Value Score available (A), HRMY combines an attractive P/B valuation with an impressive projected 3-5 year EPS growth rate of 27.11%. This combination suggests the market may be underappreciating the company’s trajectory.

Concentrix Corporation (ticker: CNXC), operating from Newark, California, provides technology-enabled business services across multiple sectors. CNXC carries a Zacks Rank of #2, a Value Score of A, and a projected 3-5 year EPS growth rate of 8.76%, demonstrating steady operational progress beneath an attractive P/B valuation.

Patria Investments Limited (ticker: PAX), domiciled in Grand Cayman, manages private markets investments predominantly across Latin America, including private equity, infrastructure, and real estate funds. With a Zacks Rank of #1, a Value Score of A, and a projected 3-5 year EPS growth rate of 15.39%, PAX exemplifies how alternative asset management can offer compelling value characteristics.

Global Payments (ticker: GPN), headquartered in Atlanta, ranks among the leading payment technology and software providers globally. GPN maintains a Zacks Rank of #2, a Value Score of A, and a projected 3-5 year EPS growth rate of 11.54%, positioning it as an established player in an expanding sector with reasonable valuation metrics.

Why Price-to-Book Screening Deserves Your Attention

The historical track record speaks clearly. Since 2000, stock-picking strategies grounded in systematic Zacks research have generated average annual returns of 48.4%, 50.2%, and 56.7% — far outpacing the S&P 500’s historical average of 7.7% annually. These results underscore a fundamental principle: disciplined, multi-metric analysis beats casual stock browsing.

The P/B ratio’s true power emerges not as a standalone screening tool, but as part of a integrated framework that considers growth, profitability, momentum, and market dynamics simultaneously. By filtering for stocks trading below their industry’s typical P/B valuations while ensuring solid earnings prospects and institutional analyst support, investors gain systematic access to opportunities the broader market may have overlooked.

This February, examining companies that meet rigorous price-to-book and complementary screening criteria offers a practical pathway to the kind of value-with-growth opportunities that have historically driven strong long-term returns.