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EWBC vs. FRC: Which Stock Is the Better Value Option?

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Investors interested in Banks - West stocks are likely familiar with East West Bancorp (EWBC - Free Report) and First Republic Bank . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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, East West Bancorp is sporting a Zacks Rank of #2 (Buy), while First Republic Bank has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that EWBC likely has seen a stronger improvement to its earnings outlook than FRC has recently. 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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

EWBC currently has a forward P/E ratio of 13.02, while FRC has a forward P/E of 27.37. We also note that EWBC has a PEG ratio of 1.30. 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. FRC currently has a PEG ratio of 1.67.

Another notable valuation metric for EWBC is its P/B ratio of 1.99. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, FRC has a P/B of 3.06.

These are just a few of the metrics contributing to EWBC's Value grade of B and FRC's Value grade of D.

EWBC stands above FRC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that EWBC is the superior value option right now.


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