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

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·2 min read
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Investors interested in stocks from the Banks - West sector have probably already heard of East West Bancorp (EWBC) and SVB Financial (SIVB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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 SVB Financial are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that EWBC likely has seen a stronger improvement to its earnings outlook than SIVB has recently. 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.

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.

EWBC currently has a forward P/E ratio of 11.40, while SIVB has a forward P/E of 19.28. We also note that EWBC has a PEG ratio of 1.14. 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. SIVB currently has a PEG ratio of 2.41.

Another notable valuation metric for EWBC is its P/B ratio of 1.75. 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, SIVB has a P/B of 3.25.

These are just a few of the metrics contributing to EWBC's Value grade of B and SIVB's Value grade of C.

EWBC has seen stronger estimate revision activity and sports more attractive valuation metrics than SIVB, so it seems like value investors will conclude that EWBC is the superior option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
East West Bancorp, Inc. (EWBC) : Free Stock Analysis Report
SVB Financial Group (SIVB) : Free Stock Analysis Report
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