Investors looking for stocks in the Banks - Northeast sector might want to consider either Atlantic Capital Bancshares (ACBI) or Community Bank System (CBU). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 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.
Atlantic Capital Bancshares has a Zacks Rank of #2 (Buy), while Community Bank System has a Zacks Rank of #3 (Hold) right now. This means that ACBI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ACBI currently has a forward P/E ratio of 15.33, while CBU has a forward P/E of 20.06. We also note that ACBI has a PEG ratio of 0.60. 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. CBU currently has a PEG ratio of 2.51.
Another notable valuation metric for ACBI is its P/B ratio of 1.33. 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, CBU has a P/B of 1.92.
These are just a few of the metrics contributing to ACBI's Value grade of B and CBU's Value grade of D.
ACBI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ACBI is likely the superior value option right now.
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Atlantic Capital Bancshares, Inc. (ACBI) : Free Stock Analysis Report
Community Bank System, Inc. (CBU) : Free Stock Analysis Report
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