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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
East West Bancorp and SVB Financial are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EWBC is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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 11.97, while SIVB has a forward P/E of 17.51. We also note that EWBC has a PEG ratio of 1.20. 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. SIVB currently has a PEG ratio of 2.19.
Another notable valuation metric for EWBC is its P/B ratio of 1.89. 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 2.44.
Based on these metrics and many more, EWBC holds a Value grade of B, while SIVB has a Value grade of C.
EWBC is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that EWBC is likely the superior value option right now.
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East West Bancorp, Inc. (EWBC) : Free Stock Analysis Report
SVB Financial Group (SIVB) : Free Stock Analysis Report
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