Back to top

Image: Bigstock

KEY vs. USB: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors with an interest in Banks - Major Regional stocks have likely encountered both KeyCorp (KEY - Free Report) and U.S. Bancorp (USB - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

KeyCorp has a Zacks Rank of #2 (Buy), while U.S. Bancorp has a Zacks Rank of #3 (Hold) right now. This means that KEY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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 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.

KEY currently has a forward P/E ratio of 10.24, while USB has a forward P/E of 12.99. We also note that KEY has a PEG ratio of 0.45. 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. USB currently has a PEG ratio of 2.16.

Another notable valuation metric for KEY is its P/B ratio of 1.34. 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, USB has a P/B of 1.92.

These metrics, and several others, help KEY earn a Value grade of B, while USB has been given a Value grade of C.

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

In-Depth Zacks Research for the Tickers Above

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

KeyCorp (KEY) - free report >>

U.S. Bancorp (USB) - free report >>

Published in