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ASB or FMBI: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Banks - Midwest sector might want to consider either Associated Banc-Corp (ASB - Free Report) or First Midwest Bancorp . 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Associated Banc-Corp has a Zacks Rank of #2 (Buy), while First Midwest Bancorp has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ASB likely has seen a stronger improvement to its earnings outlook than FMBI has recently. But this is just one factor that value investors are interested in.

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.

ASB currently has a forward P/E ratio of 13.38, while FMBI has a forward P/E of 16.20. We also note that ASB has a PEG ratio of 1.91. 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. FMBI currently has a PEG ratio of 2.31.

Another notable valuation metric for ASB is its P/B ratio of 1.30. 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, FMBI has a P/B of 1.48.

These are just a few of the metrics contributing to ASB's Value grade of B and FMBI's Value grade of C.

ASB 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 ASB is likely the superior value option right now.


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