Investors with an interest in Banks - Midwest stocks have likely encountered both Wintrust Financial (WTFC) and Lakeland Financial (LKFN). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Wintrust Financial is sporting a Zacks Rank of #2 (Buy), while Lakeland Financial has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that WTFC likely has seen a stronger improvement to its earnings outlook than LKFN has recently. However, value investors will care about much more than just this.
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.
WTFC currently has a forward P/E ratio of 10.46, while LKFN has a forward P/E of 13.54. We also note that WTFC has a PEG ratio of 0.77. 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. LKFN currently has a PEG ratio of 1.35.
Another notable valuation metric for WTFC is its P/B ratio of 1.21. 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, LKFN has a P/B of 2.10.
These metrics, and several others, help WTFC earn a Value grade of B, while LKFN has been given a Value grade of C.
WTFC sticks out from LKFN in both our Zacks Rank and Style Scores models, so value investors will likely feel that WTFC is the better option right now.
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Wintrust Financial Corporation (WTFC) : Free Stock Analysis Report
Lakeland Financial Corporation (LKFN) : Free Stock Analysis Report
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