Investors with an interest in Banks - West stocks have likely encountered both TriCo (TCBK) and Columbia Banking (COLB). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
TriCo and Columbia Banking are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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 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.
TCBK currently has a forward P/E ratio of 11.82, while COLB has a forward P/E of 13.23. We also note that TCBK has a PEG ratio of 1.69. 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. COLB currently has a PEG ratio of 1.89.
Another notable valuation metric for TCBK is its P/B ratio of 1.33. 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, COLB has a P/B of 1.39.
These metrics, and several others, help TCBK earn a Value grade of B, while COLB has been given a Value grade of C.
Both TCBK and COLB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TCBK is the superior value option right now.
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TriCo Bancshares (TCBK) : Free Stock Analysis Report
Columbia Banking System, Inc. (COLB) : Free Stock Analysis Report
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