Investors looking for stocks in the Banks - Northeast sector might want to consider either Fulton Financial (FULT) or Community Bank System (CBU). 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Fulton Financial has a Zacks Rank of #2 (Buy), while Community Bank System has a Zacks Rank of #3 (Hold) right now. This means that FULT'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 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.
FULT currently has a forward P/E ratio of 13.81, while CBU has a forward P/E of 19.31. We also note that FULT has a PEG ratio of 1.73. 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. CBU currently has a PEG ratio of 2.41.
Another notable valuation metric for FULT is its P/B ratio of 1.28. 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, CBU has a P/B of 1.94.
These metrics, and several others, help FULT earn a Value grade of B, while CBU has been given a Value grade of D.
FULT 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 FULT is likely the superior value option right now.
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Fulton Financial Corporation (FULT) : Free Stock Analysis Report
Community Bank System, Inc. (CBU) : Free Stock Analysis Report
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