Investors interested in Banks - Midwest stocks are likely familiar with Associated Banc-Corp (ASB) and Macatawa Bank (MCBC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Associated Banc-Corp has a Zacks Rank of #2 (Buy), while Macatawa Bank has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that ASB likely has seen a stronger improvement to its earnings outlook than MCBC has recently. But this is just one piece of the puzzle for value investors.
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 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.
ASB currently has a forward P/E ratio of 10.67, while MCBC has a forward P/E of 12.51. We also note that ASB has a PEG ratio of 1.52. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MCBC currently has a PEG ratio of 1.56.
Another notable valuation metric for ASB is its P/B ratio of 1.04. 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, MCBC has a P/B of 1.81.
These metrics, and several others, help ASB earn a Value grade of B, while MCBC has been given a Value grade of C.
ASB has seen stronger estimate revision activity and sports more attractive valuation metrics than MCBC, so it seems like value investors will conclude that ASB is the superior option right now.
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Associated Banc-Corp (ASB) : Free Stock Analysis Report
Macatawa Bank Corporation (MCBC) : Free Stock Analysis Report
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