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FSB vs. CHCO: Which Stock Is the Better Value Option?

Zacks Equity Research
Ranger Energy Services, Inc. (RNGR) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.

Investors interested in Banks - Southeast stocks are likely familiar with Franklin Financial Network (FSB) and City Holding (CHCO). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Franklin Financial Network has a Zacks Rank of #2 (Buy), while City Holding has a Zacks Rank of #3 (Hold) right now. This means that FSB's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 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.

FSB currently has a forward P/E ratio of 14.03, while CHCO has a forward P/E of 16.73. We also note that FSB has a PEG ratio of 1.40. 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. CHCO currently has a PEG ratio of 2.09.

Another notable valuation metric for FSB is its P/B ratio of 1.63. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CHCO has a P/B of 2.50.

Based on these metrics and many more, FSB holds a Value grade of B, while CHCO has a Value grade of C.

FSB 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 FSB is likely the superior value option right now.


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Franklin Financial Network, Inc. (FSB) : Free Stock Analysis Report
 
City Holding Company (CHCO) : Free Stock Analysis Report
 
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