Valuation methods help investors determine the fair value of a stock or asset. Among the most commonly used are the Price-to-Earnings (PE) ratio and the Price-to-Book Value (PBV) ratio. The PE ratio compares a company’s current market price to its earnings per share (EPS). A high PE may indicate overvaluation or expected future growth, while a low PE could signal undervaluation or poor performance. The PBV ratio compares market price to the company’s book value per share. It helps identify if a stock is priced fairly relative to its assets. A PBV below 1 can indicate that a stock is trading for less than its net assets. Investors use these ratios in combination to compare companies within the same industry. However, different sectors have different PE and PBV norms, so comparisons should be contextual. These ratios are fundamental tools for long-term investors aiming to identify value or growth opportunities.