Investors interested in stocks from the Banks - Northeast sector have probably already heard of Midland States Bancorp, Inc. (MSBI) and Community Bank System (CBU). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, both Midland States Bancorp, Inc. and Community Bank System are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
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 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.
MSBI currently has a forward P/E ratio of 15.08, while CBU has a forward P/E of 19.79. We also note that MSBI has a PEG ratio of 2.15. 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. CBU currently has a PEG ratio of 2.47.
Another notable valuation metric for MSBI is its P/B ratio of 1.46. 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, CBU has a P/B of 1.94.
These are just a few of the metrics contributing to MSBI's Value grade of B and CBU's Value grade of D.
Both MSBI and CBU are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MSBI is the superior value option right now.
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Midland States Bancorp, Inc. (MSBI) : Free Stock Analysis Report
Community Bank System, Inc. (CBU) : Free Stock Analysis Report
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