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LKFN vs. CBSH: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
American National Bankshares (AMNB) delivered earnings and revenue surprises of 11.29% and 3.86%, respectively, for the quarter ended March 2019. Do the numbers hold clues to what lies ahead for the stock?

Investors looking for stocks in the Banks - Midwest sector might want to consider either Lakeland Financial (LKFN) or Commerce Bancshares (CBSH). 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, Lakeland Financial is sporting a Zacks Rank of #2 (Buy), while Commerce Bancshares has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that LKFN likely has seen a stronger improvement to its earnings outlook than CBSH has recently. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

LKFN currently has a forward P/E ratio of 13.13, while CBSH has a forward P/E of 15.27. We also note that LKFN has a PEG ratio of 1.31. 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 1.79.

Another notable valuation metric for LKFN is its P/B ratio of 2.18. 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 2.45.

These metrics, and several others, help LKFN earn a Value grade of B, while CBSH has been given a Value grade of C.

LKFN sticks out from CBSH in both our Zacks Rank and Style Scores models, so value investors will likely feel that LKFN is the better option right now.


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Lakeland Financial Corporation (LKFN) : Free Stock Analysis Report
 
Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report
 
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