Investors interested in stocks from the Banks - Southeast sector have probably already heard of Pinnacle Financial (PNFP) and First Bancorp (FBNC). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Pinnacle Financial has a Zacks Rank of #2 (Buy), while First Bancorp has a Zacks Rank of #3 (Hold). This means that PNFP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
PNFP currently has a forward P/E ratio of 11.38, while FBNC has a forward P/E of 12.44. We also note that PNFP has a PEG ratio of 0.71. 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. FBNC currently has a PEG ratio of 3.77.
Another notable valuation metric for PNFP is its P/B ratio of 1.09. 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, FBNC has a P/B of 1.40.
Based on these metrics and many more, PNFP holds a Value grade of B, while FBNC has a Value grade of C.
PNFP is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PNFP is likely the superior value option right now.
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Pinnacle Financial Partners, Inc. (PNFP) : Free Stock Analysis Report
First Bancorp (FBNC) : Free Stock Analysis Report
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