SNV vs. FBP: Which Stock Is the Better Value Option?

Investors interested in stocks from the Banks - Southeast sector have probably already heard of Synovus Financial (SNV) and First Bancorp (FBP). 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.

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 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.

Synovus Financial and First Bancorp 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 SNV is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

SNV currently has a forward P/E ratio of 8.29, while FBP has a forward P/E of 10.16. We also note that SNV has a PEG ratio of 0.81. 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. FBP currently has a PEG ratio of 1.61.

Another notable valuation metric for SNV is its P/B ratio of 1.20. 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, FBP has a P/B of 1.83.

These metrics, and several others, help SNV earn a Value grade of A, while FBP has been given a Value grade of C.

SNV stands above FBP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SNV is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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