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TCF vs. SBNY: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Banks - Northeast sector might want to consider either TCF Financial or Signature Bank (SBNY - 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.

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, TCF Financial is sporting a Zacks Rank of #2 (Buy), while Signature Bank 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 TCF 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 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.

TCF currently has a forward P/E ratio of 14.21, while SBNY has a forward P/E of 19.74. We also note that TCF has a PEG ratio of 1.44. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SBNY currently has a PEG ratio of 2.08.

Another notable valuation metric for TCF is its P/B ratio of 1.19. 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, SBNY has a P/B of 1.94.

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

TCF has seen stronger estimate revision activity and sports more attractive valuation metrics than SBNY, so it seems like value investors will conclude that TCF is the superior option right now.


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