Investors with an interest in Banks - Midwest stocks have likely encountered both QCR Holdings (QCRH) and TCF Financial (TCF). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
QCR Holdings has a Zacks Rank of #2 (Buy), while TCF Financial has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that QCRH likely has seen a stronger improvement to its earnings outlook than TCF has recently. But this is only part of the picture 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 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.
QCRH currently has a forward P/E ratio of 9.95, while TCF has a forward P/E of 11.11. We also note that QCRH has a PEG ratio of 1. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TCF currently has a PEG ratio of 1.07.
Another notable valuation metric for QCRH is its P/B ratio of 1.16. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TCF has a P/B of 1.57.
Based on these metrics and many more, QCRH holds a Value grade of B, while TCF has a Value grade of C.
QCRH sticks out from TCF in both our Zacks Rank and Style Scores models, so value investors will likely feel that QCRH is the better option right now.
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QCR Holdings, Inc. (QCRH) : Free Stock Analysis Report
TCF Financial Corporation (TCF) : Free Stock Analysis Report
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