Investors interested in stocks from the Banks - Southwest sector have probably already heard of First Horizon National (FHN) and Cullen/Frost Bankers (CFR). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
First Horizon National has a Zacks Rank of #1 (Strong Buy), while Cullen/Frost Bankers has a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that FHN likely has seen a stronger improvement to its earnings outlook than CFR has recently. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
FHN currently has a forward P/E ratio of 13.17, while CFR has a forward P/E of 15.68. We also note that FHN has a PEG ratio of 1.22. 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. CFR currently has a PEG ratio of 6.30.
Another notable valuation metric for FHN is its P/B ratio of 1.31. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CFR has a P/B of 2.18.
Based on these metrics and many more, FHN holds a Value grade of B, while CFR has a Value grade of D.
FHN sticks out from CFR in both our Zacks Rank and Style Scores models, so value investors will likely feel that FHN is the better option right now.
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Cullen/Frost Bankers, Inc. (CFR) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
