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 stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
U.S. Bancorp and Northern Trust Corporation are both sporting a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.
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.
USB currently has a forward P/E ratio of 12.08, while NTRS has a forward P/E of 15.16. We also note that USB has a PEG ratio of 1.09. 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. NTRS currently has a PEG ratio of 1.21.
Another notable valuation metric for USB is its P/B ratio of 1.6. 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, NTRS has a P/B of 2.33.
These metrics, and several others, help USB earn a Value grade of B, while NTRS has been given a Value grade of C.
Both USB and NTRS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that USB is the superior value option right now.
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U.S. Bancorp (USB): Free Stock Analysis Report Northern Trust Corporation (NTRS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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