Investors interested in Banks - Midwest stocks are likely familiar with Independent Bank (IBCP) and Commerce Bancshares (CBSH). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Independent Bank and Commerce Bancshares are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
IBCP currently has a forward P/E ratio of 14.12, while CBSH has a forward P/E of 17.80. We also note that IBCP has a PEG ratio of 1.77. 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. CBSH currently has a PEG ratio of 1.83.
Another notable valuation metric for IBCP is its P/B ratio of 1.73. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CBSH has a P/B of 2.80.
These metrics, and several others, help IBCP earn a Value grade of B, while CBSH has been given a Value grade of C.
Both IBCP and CBSH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that IBCP is the superior value option right now.
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Independent Bank Corporation (IBCP) : Free Stock Analysis Report
Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report
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