Investors interested in stocks from the Banks - Midwest sector have probably already heard of Associated Banc-Corp (ASB) and UMB Financial (UMBF). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Associated Banc-Corp has a Zacks Rank of #2 (Buy), while UMB Financial has a Zacks Rank of #3 (Hold). This means that ASB'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 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ASB currently has a forward P/E ratio of 10.19, while UMBF has a forward P/E of 11.80. We also note that ASB 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. UMBF currently has a PEG ratio of 1.39.
Another notable valuation metric for ASB is its P/B ratio of 0.96. 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, UMBF has a P/B of 1.34.
Based on these metrics and many more, ASB holds a Value grade of B, while UMBF has a Value grade of D.
ASB stands above UMBF thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ASB is the superior value 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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