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

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 presents investors with the better value opportunity right now? 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 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 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.

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 13.11, while FRC has a forward P/E of 19.96. We also note that UMPQ has a PEG ratio of 1.46. 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. FRC currently has a PEG ratio of 1.64.

Another notable valuation metric for UMPQ is its P/B ratio of 1.06. 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 1.98.

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

UMPQ has seen stronger estimate revision activity and sports more attractive valuation metrics than FRC, so it seems like value investors will conclude that UMPQ is the superior 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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