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CIVB vs. MBWM: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Banks - Midwest sector might want to consider either Civista Bancshares (CIVB - Free Report) or Mercantile Bank (MBWM - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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.

Civista Bancshares has a Zacks Rank of #1 (Strong Buy), while Mercantile Bank has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that CIVB likely has seen a stronger improvement to its earnings outlook than MBWM has recently. But this is just one piece of the puzzle for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

CIVB currently has a forward P/E ratio of 14.31, while MBWM has a forward P/E of 15.04. We also note that CIVB has a PEG ratio of 1.79. 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. MBWM currently has a PEG ratio of 1.88.

Another notable valuation metric for CIVB is its P/B ratio of 1.48. 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 1.67.

Based on these metrics and many more, CIVB holds a Value grade of B, while MBWM has a Value grade of C.

CIVB 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 CIVB is likely the superior value option right now.


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Mercantile Bank Corporation (MBWM) - free report >>

Civista Bancshares, Inc. (CIVB) - free report >>