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Investors with an interest in Banks - Northeast stocks have likely encountered both Sandy Spring Bancorp (SASR) and Signature Bank (SBNY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Sandy Spring Bancorp has a Zacks Rank of #2 (Buy), while Signature Bank has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that SASR likely has seen a stronger improvement to its earnings outlook than SBNY has recently. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
SASR currently has a forward P/E ratio of 9.79, while SBNY has a forward P/E of 20.17. We also note that SASR has a PEG ratio of 0.95. 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. SBNY currently has a PEG ratio of 2.12.
Another notable valuation metric for SASR is its P/B ratio of 1.52. 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, SBNY has a P/B of 2.06.
Based on these metrics and many more, SASR holds a Value grade of B, while SBNY has a Value grade of D.
SASR stands above SBNY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SASR is the superior value option right now.
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Sandy Spring Bancorp, Inc. (SASR) : Free Stock Analysis Report
Signature Bank (SBNY) : Free Stock Analysis Report
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