USB or NTRS: Which Is the Better Value Stock Right Now?
Investors with an interest in Banks - Major Regional stocks have likely encountered both U.S. Bancorp (USB) and Northern Trust Corporation (NTRS). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, U.S. Bancorp is sporting a Zacks Rank of #2 (Buy), while Northern Trust Corporation has a Zacks Rank of #3 (Hold). This means that USB's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
USB currently has a forward P/E ratio of 11.96, while NTRS has a forward P/E of 16.07. We also note that USB has a PEG ratio of 1.02. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. NTRS currently has a PEG ratio of 1.05.
Another notable valuation metric for USB is its P/B ratio of 1.58. 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, NTRS has a P/B of 2.72.
These metrics, and several others, help USB earn a Value grade of B, while NTRS has been given a Value grade of F.
USB has seen stronger estimate revision activity and sports more attractive valuation metrics than NTRS, so it seems like value investors will conclude that USB is the superior option right now.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>U.S. Bancorp (USB) : Free Stock Analysis Report
Northern Trust Corporation (NTRS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
