Investors interested in Banks - West stocks are likely familiar with Heritage Commerce (HTBK) and CVB Financial (CVBF). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Heritage Commerce is sporting a Zacks Rank of #2 (Buy), while CVB Financial has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that HTBK likely has seen a stronger improvement to its earnings outlook than CVBF has recently. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
HTBK currently has a forward P/E ratio of 9.92, while CVBF has a forward P/E of 14.32. We also note that HTBK has a PEG ratio of 1.42. 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. CVBF currently has a PEG ratio of 1.51.
Another notable valuation metric for HTBK is its P/B ratio of 1.42. 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, CVBF has a P/B of 1.60.
Based on these metrics and many more, HTBK holds a Value grade of B, while CVBF has a Value grade of C.
HTBK 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 HTBK is likely the superior value option right now.
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Heritage Commerce Corp (HTBK) : Free Stock Analysis Report
CVB Financial Corporation (CVBF) : Free Stock Analysis Report
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