Investors looking for stocks in the Banks - Southeast sector might want to consider either Regions Financial (RF) or 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.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Regions Financial has a Zacks Rank of #2 (Buy), while First Bancorp has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that RF is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
RF currently has a forward P/E ratio of 11.70, while FBNC has a forward P/E of 12.60. We also note that RF has a PEG ratio of 0.94. 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. FBNC currently has a PEG ratio of 1.07.
Another notable valuation metric for RF is its P/B ratio of 1.34. 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, FBNC has a P/B of 1.53.
These are just a few of the metrics contributing to RF's Value grade of B and FBNC's Value grade of C.
RF has seen stronger estimate revision activity and sports more attractive valuation metrics than FBNC, so it seems like value investors will conclude that RF is the superior option right now.
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Regions Financial Corporation (RF) : Free Stock Analysis Report
First Bancorp (FBNC) : Free Stock Analysis Report
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