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WAFD vs. CBU: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors looking for stocks in the Banks - Northeast sector might want to consider either Washington Federal (WAFD) or Community Bank System (CBU). But which of these two companies is the best option for those looking for undervalued stocks? 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.

Right now, both Washington Federal and Community Bank System are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.

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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

WAFD currently has a forward P/E ratio of 13.44, while CBU has a forward P/E of 19.63. We also note that WAFD has a PEG ratio of 1.92. 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. CBU currently has a PEG ratio of 2.45.

Another notable valuation metric for WAFD is its P/B ratio of 1.40. 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, CBU has a P/B of 1.88.

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

Both WAFD and CBU are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that WAFD is the superior value option right now.


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Washington Federal, Inc. (WAFD) : Free Stock Analysis Report
 
Community Bank System, Inc. (CBU) : Free Stock Analysis Report
 
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