Investors interested in Banks - Northeast stocks are likely familiar with BCB Bancorp (BCBP) and Washington Federal (WAFD). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both BCB Bancorp and Washington Federal are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
BCBP currently has a forward P/E ratio of 10.15, while WAFD has a forward P/E of 13.28. We also note that BCBP has a PEG ratio of 1.02. 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. WAFD currently has a PEG ratio of 1.90.
Another notable valuation metric for BCBP is its P/B ratio of 1.01. 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, WAFD has a P/B of 1.37.
These metrics, and several others, help BCBP earn a Value grade of A, while WAFD has been given a Value grade of C.
Both BCBP and WAFD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BCBP is the superior value option right now.
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BCB Bancorp, Inc. (NJ) (BCBP) : Free Stock Analysis Report
Washington Federal, Inc. (WAFD) : Free Stock Analysis Report
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