Investors with an interest in Banks - West stocks have likely encountered both Zions (ZION) and First Republic Bank (FRC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.
Currently, Zions has a Zacks Rank of #2 (Buy), while First Republic Bank has a Zacks Rank of #3 (Hold). This means that ZION's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ZION currently has a forward P/E ratio of 9.73, while FRC has a forward P/E of 18.53. We also note that ZION has a PEG ratio of 1.10. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FRC currently has a PEG ratio of 1.64.
Another notable valuation metric for ZION is its P/B ratio of 1.13. 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, FRC has a P/B of 2.02.
These are just a few of the metrics contributing to ZION's Value grade of B and FRC's Value grade of C.
ZION 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 ZION is likely the superior value option right now.
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Zions Bancorporation (ZION) : Free Stock Analysis Report
First Republic Bank (FRC) : Free Stock Analysis Report
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