Investors looking for stocks in the Banks - West sector might want to consider either Guaranty Bancorp (GBNK) or Peoples Utah Bancorp (PUB). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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.
Right now, both Guaranty Bancorp and Peoples Utah Bancorp are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
GBNK currently has a forward P/E ratio of 11.69, while PUB has a forward P/E of 13.60. We also note that GBNK has a PEG ratio of 1.17. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PUB currently has a PEG ratio of 1.70.
Another notable valuation metric for GBNK is its P/B ratio of 1.55. 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, PUB has a P/B of 1.93.
These are just a few of the metrics contributing to GBNK's Value grade of B and PUB's Value grade of C.
Both GBNK and PUB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GBNK is the superior value option right now.
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Guaranty Bancorp (GBNK) : Free Stock Analysis Report
People's Utah Bancorp (PUB) : Free Stock Analysis Report
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