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STBZ vs. CHCO: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
MasterCard (MA) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Investors with an interest in Banks - Southeast stocks have likely encountered both State Bank Financial (STBZ) and City Holding (CHCO). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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.

Right now, both State Bank Financial and City Holding are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.

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.

STBZ currently has a forward P/E ratio of 9.21, while CHCO has a forward P/E of 13.71. We also note that STBZ has a PEG ratio of 0.68. 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. CHCO currently has a PEG ratio of 1.71.

Another notable valuation metric for STBZ is its P/B ratio of 1.20. 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, CHCO has a P/B of 2.08.

These are just a few of the metrics contributing to STBZ's Value grade of A and CHCO's Value grade of C.

Both STBZ and CHCO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that STBZ is the superior value option right now.


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State Bank Financial Corporation. (STBZ) : Free Stock Analysis Report
 
City Holding Company (CHCO) : Free Stock Analysis Report
 
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