If a company has a low price-to-book ratio and a high price-to-earnings ratio, this is an indicator that the stock is most likely underpriced.

Question

Quizplus · Accepted Answer

A low price-to-book ratio and a high price-to-earnings ratio could indicate a company that is overvalued, as investors are willing to pay a higher price for each dollar of earnings compared to the value of the company's assets. Therefore, the stock may actually be overpriced rather than underpriced.

If a Company Has a Low Price-To-Book Ratio and a High