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UMPQ vs. FRC: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors with an interest in Banks - West stocks have likely encountered both Umpqua Holdings (UMPQ) and First Republic Bank (FRC). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight 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 only part of the picture for value investors.

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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

UMPQ currently has a forward P/E ratio of 10.87, while FRC has a forward P/E of 17.13. We also note that UMPQ has a PEG ratio of 1.21. 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 1.41.

Another notable valuation metric for UMPQ is its P/B ratio of 0.88. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, FRC has a P/B of 1.71.

Based on these metrics and many more, UMPQ holds a Value grade of A, while FRC has a Value grade of C.

UMPQ stands above FRC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that UMPQ is the superior value option right now.


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Umpqua Holdings Corporation (UMPQ) : Free Stock Analysis Report
 
First Republic Bank (FRC) : Free Stock Analysis Report
 
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