Investors with an interest in Financial - Savings and Loan stocks have likely encountered both Banner (BANR) and Northwest Bancshares (NWBI). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Banner and Northwest Bancshares are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BANR has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
BANR currently has a forward P/E ratio of 13.52, while NWBI has a forward P/E of 17.13. We also note that BANR has a PEG ratio of 1.93. 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. NWBI currently has a PEG ratio of 2.45.
Another notable valuation metric for BANR is its P/B ratio of 1.29. 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, NWBI has a P/B of 1.50.
These metrics, and several others, help BANR earn a Value grade of B, while NWBI has been given a Value grade of C.
BANR stands above NWBI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BANR is the superior value option right now.
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Banner Corporation (BANR) : Free Stock Analysis Report
Northwest Bancshares, Inc. (NWBI) : Free Stock Analysis Report
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