Investors looking for stocks in the Banks - West sector might want to consider either Zions (ZION) or Bank of Hawaii (BOH). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Zions has a Zacks Rank of #2 (Buy), while Bank of Hawaii has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that ZION likely has seen a stronger improvement to its earnings outlook than BOH has recently. However, value investors will care about much more than just this.
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 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.
ZION currently has a forward P/E ratio of 10.44, while BOH has a forward P/E of 13.65. We also note that ZION has a PEG ratio of 1.23. 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. BOH currently has a PEG ratio of 1.82.
Another notable valuation metric for ZION is its P/B ratio of 1.18. 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, BOH has a P/B of 2.40.
These metrics, and several others, help ZION earn a Value grade of A, while BOH has been given a Value grade of C.
ZION has seen stronger estimate revision activity and sports more attractive valuation metrics than BOH, so it seems like value investors will conclude that ZION is the superior option right now.
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Zions Bancorporation (ZION) : Free Stock Analysis Report
Bank of Hawaii Corporation (BOH) : Free Stock Analysis Report
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