Investors looking for stocks in the Banks - Northeast sector might want to consider either Nicolet Bankshares (NCBS) or Community Bank System (CBU). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Nicolet Bankshares and Community Bank System have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.
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.
NCBS currently has a forward P/E ratio of 13.33, while CBU has a forward P/E of 19.25. We also note that NCBS has a PEG ratio of 1.90. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CBU currently has a PEG ratio of 2.41.
Another notable valuation metric for NCBS is its P/B ratio of 1.42. 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, CBU has a P/B of 1.85.
Based on these metrics and many more, NCBS holds a Value grade of B, while CBU has a Value grade of D.
Both NCBS and CBU are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NCBS is the superior value option right now.
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