Back to top

Image: Bigstock

FBIZ or UMBF: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors looking for stocks in the Banks - Midwest sector might want to consider either First Business Financial Services (FBIZ - Free Report) or UMB Financial (UMBF - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, First Business Financial Services is sporting a Zacks Rank of #1 (Strong Buy), while UMB Financial has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FBIZ 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 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.

FBIZ currently has a forward P/E ratio of 10.35, while UMBF has a forward P/E of 14.21. We also note that FBIZ has a PEG ratio of 1.29. 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. UMBF currently has a PEG ratio of 1.88.

Another notable valuation metric for FBIZ is its P/B ratio of 1.11. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, UMBF has a P/B of 1.42.

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

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


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


First Business Financial Services, Inc. (FBIZ) - free report >>

UMB Financial Corporation (UMBF) - free report >>

Published in