Investors looking for stocks in the Banks - Major Regional sector might want to consider either Truist Financial Corporation (TFC) or Fifth Third Bancorp (FITB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Truist Financial Corporation has a Zacks Rank of #2 (Buy), while Fifth Third Bancorp has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TFC has an improving earnings outlook. But this is only part of the picture for value investors.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
TFC currently has a forward P/E ratio of 10.73, while FITB has a forward P/E of 12.86. We also note that TFC has a PEG ratio of 0.83. 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. FITB currently has a PEG ratio of 1.05.
Another notable valuation metric for TFC is its P/B ratio of 1.02. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, FITB has a P/B of 1.5.
These are just a few of the metrics contributing to TFC's Value grade of B and FITB's Value grade of C.
TFC is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that TFC is likely the superior value option right now.
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Fifth Third Bancorp (FITB) : 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.
