Investors with an interest in Banks - Midwest stocks have likely encountered both Peoples Bancorp (PEBO) 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.
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, Peoples Bancorp is sporting a Zacks Rank of #2 (Buy), while Commerce Bancshares has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PEBO has an improving earnings outlook. 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 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.
PEBO currently has a forward P/E ratio of 14.63, while CBSH has a forward P/E of 16.94. We also note that PEBO has a PEG ratio of 1.83. 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 1.99.
Another notable valuation metric for PEBO is its P/B ratio of 1.35. 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 2.65.
These are just a few of the metrics contributing to PEBO's Value grade of B and CBSH's Value grade of C.
PEBO stands above CBSH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PEBO is the superior value option right now.
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Peoples Bancorp Inc. (PEBO) : Free Stock Analysis Report
Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report
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