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TCF vs. FIBK: Which Stock Is the Better Value Option?

Zacks Equity Research
HPT vs. HCP: Which Stock Is the Better Value Option?

Investors with an interest in Banks - Midwest stocks have likely encountered both TCF Financial (TCF) and First Interstate BancSystem (FIBK). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

TCF Financial and First Interstate BancSystem are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that TCF's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

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 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.

TCF currently has a forward P/E ratio of 12.75, while FIBK has a forward P/E of 15.18. We also note that TCF has a PEG ratio of 1.09. 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. FIBK currently has a PEG ratio of 1.69.

Another notable valuation metric for TCF is its P/B ratio of 1.67. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FIBK has a P/B of 1.74.

These metrics, and several others, help TCF earn a Value grade of B, while FIBK has been given a Value grade of C.

TCF has seen stronger estimate revision activity and sports more attractive valuation metrics than FIBK, so it seems like value investors will conclude that TCF is the superior option right now.

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TCF Financial Corporation (TCF) : Free Stock Analysis Report
First Interstate BancSystem, Inc. (FIBK) : Free Stock Analysis Report
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