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ZION vs. TCBK: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
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Investors interested in Banks - West stocks are likely familiar with Zions (ZION) and TriCo (TCBK). 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 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.

Zions has a Zacks Rank of #2 (Buy), while TriCo has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ZION is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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.

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 11.04, while TCBK has a forward P/E of 13.33. We also note that ZION has a PEG ratio of 1.37. 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. TCBK currently has a PEG ratio of 1.90.

Another notable valuation metric for ZION is its P/B ratio of 1.34. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TCBK has a P/B of 1.45.

Based on these metrics and many more, ZION holds a Value grade of B, while TCBK has a 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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