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EWBC or FRC: Which Is the Better Value Stock Right Now?

·2 min read

Investors interested in stocks from the Banks - West sector have probably already heard of East West Bancorp (EWBC) and First Republic Bank (FRC). 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 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.

East West Bancorp and First Republic Bank are both sporting a Zacks Rank of # 2 (Buy) right now. 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. But this is just one piece of the puzzle for value investors.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

EWBC currently has a forward P/E ratio of 10.13, while FRC has a forward P/E of 17.48. We also note that EWBC has a PEG ratio of 1.01. 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. FRC currently has a PEG ratio of 1.42.

Another notable valuation metric for EWBC is its P/B ratio of 1.77. 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, FRC has a P/B of 2.12.

These metrics, and several others, help EWBC earn a Value grade of B, while FRC has been given a Value grade of D.

Both EWBC and FRC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EWBC is the superior value option right now.


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East West Bancorp, Inc. (EWBC) : Free Stock Analysis Report
 
First Republic Bank (FRC) : Free Stock Analysis Report
 
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Zacks Investment Research