Investors with an interest in Banks - Midwest stocks have likely encountered both MidWestOne (MOFG) and 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, MidWestOne has a Zacks Rank of #1 (Strong Buy), while Commerce Bancshares has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that MOFG likely has seen a stronger improvement to its earnings outlook than CBSH has recently. However, value investors will care about much more than just this.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
MOFG currently has a forward P/E ratio of 12.55, while CBSH has a forward P/E of 16.08. We also note that MOFG has a PEG ratio of 1.57. 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 1.88.
Another notable valuation metric for MOFG is its P/B ratio of 1.18. 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 2.54.
These are just a few of the metrics contributing to MOFG's Value grade of B and CBSH's Value grade of C.
MOFG stands above CBSH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MOFG is the superior value option right now.
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MidWestOne Financial Group, Inc. (MOFG) : Free Stock Analysis Report
Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report
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