Investors with an interest in Banks - Northeast stocks have likely encountered both Fulton Financial (FULT) and Webster Financial (WBS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both Fulton Financial and Webster Financial have 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. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
FULT currently has a forward P/E ratio of 13.56, while WBS has a forward P/E of 14.57. We also note that FULT has a PEG ratio of 1.70. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. WBS currently has a PEG ratio of 1.82.
Another notable valuation metric for FULT is its P/B ratio of 1.26. 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, WBS has a P/B of 1.87.
These metrics, and several others, help FULT earn a Value grade of B, while WBS has been given a Value grade of C.
Both FULT and WBS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FULT is the superior value option right now.
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