The price-to-book (also know as the price-equity ratio) is calculated by dividing the company's market capitalization against it's total book value. A companies book value is the sum of it's total assets less any intangible assets and liabilities.
A lower P/B ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company. A negative book value indicates a company with potentially no value.
This ratio also gives some idea of whether you're paying too much for what would be left if the company went bankrupt immediately.