Investors interested in Banks - Northeast stocks are likely familiar with Great Western Bancorp (GWB) and Webster Financial (WBS). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Great Western Bancorp is sporting a Zacks Rank of #2 (Buy), while Webster Financial has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GWB has an improving earnings outlook. But this is only part of the picture 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
GWB currently has a forward P/E ratio of 12.10, while WBS has a forward P/E of 16.53. We also note that GWB has a PEG ratio of 1. 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. WBS currently has a PEG ratio of 2.07.
Another notable valuation metric for GWB is its P/B ratio of 1.31. 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, WBS has a P/B of 2.10.
Based on these metrics and many more, GWB holds a Value grade of B, while WBS has a Value grade of C.
GWB sticks out from WBS in both our Zacks Rank and Style Scores models, so value investors will likely feel that GWB is the better option right now.
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Great Western Bancorp, Inc. (GWB) : Free Stock Analysis Report
Webster Financial Corporation (WBS) : Free Stock Analysis Report
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