Investors with an interest in Banks - Midwest stocks have likely encountered both Old Second Bancorp (OSBC) and 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.
Old Second Bancorp and Commerce Bancshares are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.
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.
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.
OSBC currently has a forward P/E ratio of 12.29, while CBSH has a forward P/E of 16.76. We also note that OSBC has a PEG ratio of 1.76. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CBSH currently has a PEG ratio of 1.96.
Another notable valuation metric for OSBC is its P/B ratio of 2.04. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, CBSH has a P/B of 2.65.
These metrics, and several others, help OSBC earn a Value grade of B, while CBSH has been given a Value grade of C.
Both OSBC and CBSH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that OSBC is the superior value option right now.
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Old Second Bancorp, Inc. (OSBC) : Free Stock Analysis Report
Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report
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