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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Umpqua Holdings is sporting a Zacks Rank of #2 (Buy), while First Republic Bank has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that UMPQ likely has seen a stronger improvement to its earnings outlook than FRC has recently. But this is just one factor that value investors are interested in.
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.
UMPQ currently has a forward P/E ratio of 13.50, while FRC has a forward P/E of 19.35. We also note that UMPQ has a PEG ratio of 1.50. 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. FRC currently has a PEG ratio of 1.59.
Another notable valuation metric for UMPQ is its P/B ratio of 1.08. 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 1.92.
Based on these metrics and many more, UMPQ holds a Value grade of B, while FRC has 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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