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WAL vs. BOH: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors interested in stocks from the Banks - West sector have probably already heard of Western Alliance (WAL) and Bank of Hawaii (BOH). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, both Western Alliance and Bank of Hawaii are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

WAL currently has a forward P/E ratio of 11.57, while BOH has a forward P/E of 16.87. We also note that WAL has a PEG ratio of 0.77. 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. BOH currently has a PEG ratio of 2.11.

Another notable valuation metric for WAL is its P/B ratio of 2.02. 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, BOH has a P/B of 2.87.

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

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


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Western Alliance Bancorporation (WAL) : Free Stock Analysis Report
 
Bank of Hawaii Corporation (BOH) : Free Stock Analysis Report
 
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Zacks Investment Research