Investors looking for stocks in the Banks - Midwest sector might want to consider either MidWestOne (MOFG) 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.
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, MidWestOne is sporting a Zacks Rank of #1 (Strong Buy), while Commerce Bancshares has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that MOFG 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 analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
MOFG currently has a forward P/E ratio of 10.21, while CBSH has a forward P/E of 16.37. We also note that MOFG has a PEG ratio of 1.28. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CBSH currently has a PEG ratio of 2.98.
Another notable valuation metric for MOFG is its P/B ratio of 1.01. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CBSH has a P/B of 2.20.
Based on these metrics and many more, MOFG holds a Value grade of B, while CBSH has a Value grade of C.
MOFG has seen stronger estimate revision activity and sports more attractive valuation metrics than CBSH, so it seems like value investors will conclude that MOFG is the superior 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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