Investors with an interest in Banks - Midwest stocks have likely encountered both Associated Banc-Corp (ASB) 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Associated Banc-Corp and Commerce Bancshares are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. 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 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.
ASB currently has a forward P/E ratio of 9.10, while CBSH has a forward P/E of 12.62. We also note that ASB has a PEG ratio of 1.20. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CBSH currently has a PEG ratio of 2.59.
Another notable valuation metric for ASB is its P/B ratio of 0.93. 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, CBSH has a P/B of 1.83.
These are just a few of the metrics contributing to ASB's Value grade of B and CBSH's Value grade of C.
ASB stands above CBSH 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 Commerce Bancshares, Inc. (CBSH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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