/ Book Ratios (P/BV) he Price / Book value ratio looks at the valuation of the company (its Market Value) relative to its Common Equity. he premise of the Price/Book ratio is that firms expected to generate returns higher than their cost of equity should trade above book value. he Return on Equity is the expected future earnings from investments in Equity. lispriced securities would see an inconsistency between Return on Equity and Market Value / Book Value.. An undervalued security should see a high ROE but a low Price/Book. An overvalued security should see a low ROE but a high Price/Book. Based on this analysis, is TSLA under- or over-valued relative to GOOGL? Notice the significant difference between the Tesla GAAP ROE and its non-GAAP ROE