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UMBF vs. CBSH: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors looking for stocks in the Banks - Midwest sector might want to consider either UMB Financial (UMBF) or Commerce Bancshares (CBSH). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, UMB Financial has a Zacks Rank of #2 (Buy), while Commerce Bancshares has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that UMBF 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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

UMBF currently has a forward P/E ratio of 15.36, while CBSH has a forward P/E of 20.16. We also note that UMBF has a PEG ratio of 2.92. 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. CBSH currently has a PEG ratio of 6.72.

Another notable valuation metric for UMBF is its P/B ratio of 1.30. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, CBSH has a P/B of 2.59.

These metrics, and several others, help UMBF earn a Value grade of B, while CBSH has been given a Value grade of D.

UMBF is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that UMBF is likely the superior value option right now.


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UMB Financial Corporation (UMBF) : Free Stock Analysis Report
 
Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report
 
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