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

·2 min read

Investors interested in Banks - West stocks are likely familiar with 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.

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.

Right now, East West Bancorp is sporting a Zacks Rank of #2 (Buy), while SVB Financial has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that EWBC likely has seen a stronger improvement to its earnings outlook than SIVB has recently. However, value investors will care about much more than just this.

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.

EWBC currently has a forward P/E ratio of 11.98, while SIVB has a forward P/E of 18.21. We also note that EWBC has a PEG ratio of 1.20. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SIVB currently has a PEG ratio of 2.28.

Another notable valuation metric for EWBC is its P/B ratio of 1.92. 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 2.53.

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

EWBC sticks out from SIVB in both our Zacks Rank and Style Scores models, so value investors will likely feel that EWBC is the better option right now.


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Zacks Investment Research