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WTFC vs. MBWM: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors looking for stocks in the Banks - Midwest sector might want to consider either Wintrust Financial (WTFC) or Mercantile Bank (MBWM). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Wintrust Financial and Mercantile Bank are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that WTFC is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

WTFC currently has a forward P/E ratio of 10.71, while MBWM has a forward P/E of 12.58. We also note that WTFC has a PEG ratio of 0.79. 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. MBWM currently has a PEG ratio of 1.57.

Another notable valuation metric for WTFC is its P/B ratio of 1.24. 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, MBWM has a P/B of 1.37.

These are just a few of the metrics contributing to WTFC's Value grade of B and MBWM's Value grade of C.

WTFC is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that WTFC is likely the superior value option right now.


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Wintrust Financial Corporation (WTFC) : Free Stock Analysis Report
 
Mercantile Bank Corporation (MBWM) : Free Stock Analysis Report
 
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Zacks Investment Research