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, BCB Bancorp has a Zacks Rank of #2 (Buy), while Washington Federal has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that BCBP likely has seen a stronger improvement to its earnings outlook than WAFD 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
BCBP currently has a forward P/E ratio of 9.39, while WAFD has a forward P/E of 11.70. We also note that BCBP has a PEG ratio of 0.94. 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. WAFD currently has a PEG ratio of 1.67.
Another notable valuation metric for BCBP is its P/B ratio of 1.05. 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 1.19.
These metrics, and several others, help BCBP earn a Value grade of A, while WAFD has been given a Value grade of D.
BCBP has seen stronger estimate revision activity and sports more attractive valuation metrics than WAFD, so it seems like value investors will conclude that BCBP is the superior 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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