Investors interested in stocks from the Banks - West sector have probably already heard of Umpqua Holdings (UMPQ) and First Republic Bank (FRC). 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.
Umpqua Holdings has a Zacks Rank of #2 (Buy), while First Republic Bank has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that UMPQ has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
UMPQ currently has a forward P/E ratio of 13.08, while FRC has a forward P/E of 18.40. We also note that UMPQ has a PEG ratio of 1.45. 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. FRC currently has a PEG ratio of 1.51.
Another notable valuation metric for UMPQ is its P/B ratio of 1.04. 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, FRC has a P/B of 1.83.
These metrics, and several others, help UMPQ earn a Value grade of B, while FRC has been given a Value grade of C.
UMPQ sticks out from FRC in both our Zacks Rank and Style Scores models, so value investors will likely feel that UMPQ is the better option right now.
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Umpqua Holdings Corporation (UMPQ) : Free Stock Analysis Report
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