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FBIZ or LKFN: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in stocks from the Banks - Midwest sector have probably already heard of First Business Financial Services (FBIZ) and Lakeland Financial (LKFN). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

First Business Financial Services and Lakeland 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 FBIZ is likely seeing its earnings outlook improve to a greater extent. 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 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.

FBIZ currently has a forward P/E ratio of 10.34, while LKFN has a forward P/E of 13.72. We also note that FBIZ has a PEG ratio of 1.29. 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. LKFN currently has a PEG ratio of 1.37.

Another notable valuation metric for FBIZ is its P/B ratio of 1.11. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, LKFN has a P/B of 2.13.

These metrics, and several others, help FBIZ earn a Value grade of A, while LKFN has been given a Value grade of C.

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


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First Business Financial Services, Inc. (FBIZ) : Free Stock Analysis Report
 
Lakeland Financial Corporation (LKFN) : Free Stock Analysis Report
 
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