Investors with an interest in Banks - Midwest stocks have likely encountered both Huntington Bancshares (HBAN) and Commerce Bancshares (CBSH). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Huntington Bancshares and Commerce Bancshares are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HBAN is likely seeing its earnings outlook improve to a greater extent. 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
HBAN currently has a forward P/E ratio of 10.73, while CBSH has a forward P/E of 12.62. We also note that HBAN has a PEG ratio of 0.75. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CBSH currently has a PEG ratio of 4.84.
Another notable valuation metric for HBAN is its P/B ratio of 1.19. 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, CBSH has a P/B of 1.89.
These metrics, and several others, help HBAN earn a Value grade of A, while CBSH has been given a Value grade of C.
HBAN sticks out from CBSH in both our Zacks Rank and Style Scores models, so value investors will likely feel that HBAN is the better option right now.
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Huntington Bancshares Incorporated (HBAN): Free Stock Analysis Report Commerce Bancshares, Inc. (CBSH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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