Investors interested in Banks - Midwest stocks are likely familiar with Associated Banc-Corp (ASB) and UMB Financial (UMBF). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Associated Banc-Corp has a Zacks Rank of #2 (Buy), while UMB Financial has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ASB is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
ASB currently has a forward P/E ratio of 9.22, while UMBF has a forward P/E of 10.56. We also note that ASB has a PEG ratio of 0.92. 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. UMBF currently has a PEG ratio of 1.24.
Another notable valuation metric for ASB is its P/B ratio of 0.86. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, UMBF has a P/B of 1.2.
Based on these metrics and many more, ASB holds a Value grade of B, while UMBF has a Value grade of D.
ASB sticks out from UMBF in both our Zacks Rank and Style Scores models, so value investors will likely feel that ASB is the better option right now.
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Associated Banc-Corp (ASB): Free Stock Analysis Report UMB Financial Corporation (UMBF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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