Investors interested in Banks - West stocks are likely familiar with FS Bancorp (FSBW) and Columbia Banking (COLB). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
FS Bancorp and Columbia Banking are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that FSBW likely has seen a stronger improvement to its earnings outlook than COLB has recently. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
FSBW currently has a forward P/E ratio of 9.17, while COLB has a forward P/E of 13.38. We also note that FSBW has a PEG ratio of 1.31. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. COLB currently has a PEG ratio of 1.91.
Another notable valuation metric for FSBW is its P/B ratio of 1.04. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, COLB has a P/B of 1.23.
Based on these metrics and many more, FSBW holds a Value grade of B, while COLB has a Value grade of D.
FSBW has seen stronger estimate revision activity and sports more attractive valuation metrics than COLB, so it seems like value investors will conclude that FSBW is the superior option right now.
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FS Bancorp, Inc. (FSBW) : Free Stock Analysis Report
Columbia Banking System, Inc. (COLB) : Free Stock Analysis Report
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