Investors looking for stocks in the Banks - Midwest sector might want to consider either Macatawa Bank (MCBC) or Commerce Bancshares (CBSH). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Macatawa Bank has a Zacks Rank of #2 (Buy), while Commerce Bancshares has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that MCBC likely has seen a stronger improvement to its earnings outlook than CBSH has recently. But this is just one piece of the puzzle 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.
MCBC currently has a forward P/E ratio of 12.15, while CBSH has a forward P/E of 16.05. We also note that MCBC has a PEG ratio of 1.52. 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. CBSH currently has a PEG ratio of 2.01.
Another notable valuation metric for MCBC is its P/B ratio of 1.76. 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, CBSH has a P/B of 2.26.
These are just a few of the metrics contributing to MCBC's Value grade of B and CBSH's Value grade of C.
MCBC has seen stronger estimate revision activity and sports more attractive valuation metrics than CBSH, so it seems like value investors will conclude that MCBC is the superior option right now.
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Macatawa Bank Corporation (MCBC) : Free Stock Analysis Report
Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report
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