Investors looking for stocks in the Banks - Northeast sector might want to consider either Citizens Financial Group (CFG) or Central Bancompany (CBC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Citizens Financial Group and Central Bancompany are both sporting a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
CFG currently has a forward P/E ratio of 13.88, while CBC has a forward P/E of 17.08. We also note that CFG has a PEG ratio of 0.56. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CBC currently has a PEG ratio of 1.92.
Another notable valuation metric for CFG is its P/B ratio of 1.29. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CBC has a P/B of 2.09.
Based on these metrics and many more, CFG holds a Value grade of B, while CBC has a Value grade of D.
Both CFG and CBC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CFG is the superior value option right now.
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Central Bancompany (CBC) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
