ASB vs. UMBF: Which Stock Is the Better Value Option?

Investors with an interest in Banks - Midwest stocks have likely encountered both Associated Banc-Corp (ASB) and UMB Financial (UMBF). 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 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 #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ASB is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

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.

ASB currently has a forward P/E ratio of 9.12, while UMBF has a forward P/E of 10.23. We also note that ASB has a PEG ratio of 0.95. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. UMBF currently has a PEG ratio of 1.22.

Another notable valuation metric for ASB is its P/B ratio of 0.82. 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, UMBF has a P/B of 1.35.

Based on these metrics and many more, ASB holds a Value grade of B, while UMBF has a Value grade of F.

ASB sticks out from UMBF in both our Zacks Rank and Style Scores models, so value investors will likely feel that ASB is the better option right now.

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

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