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PNFP vs. CHCO: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Banks - Southeast sector have probably already heard of Pinnacle Financial (PNFP - Free Report) and City Holding (CHCO - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Pinnacle Financial has a Zacks Rank of #2 (Buy), while City Holding has a Zacks Rank of #3 (Hold) right now. This means that PNFP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

PNFP currently has a forward P/E ratio of 10.81, while CHCO has a forward P/E of 14.04. We also note that PNFP has a PEG ratio of 0.77. 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. CHCO currently has a PEG ratio of 1.75.

Another notable valuation metric for PNFP is its P/B ratio of 1.05. 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, CHCO has a P/B of 1.98.

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

PNFP sticks out from CHCO in both our Zacks Rank and Style Scores models, so value investors will likely feel that PNFP is the better option right now.


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Pinnacle Financial Partners, Inc. (PNFP) - free report >>

City Holding Company (CHCO) - free report >>

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