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PB vs. CFR: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Banks - Southwest sector might want to consider either Prosperity Bancshares (PB - Free Report) or Cullen/Frost Bankers (CFR - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Currently, Prosperity Bancshares has a Zacks Rank of #2 (Buy), while Cullen/Frost Bankers 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 PB is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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.

PB currently has a forward P/E ratio of 13.15, while CFR has a forward P/E of 18.80. We also note that PB has a PEG ratio of 1.31. 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. CFR currently has a PEG ratio of 1.98.

Another notable valuation metric for PB is its P/B ratio of 1.08. 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, CFR has a P/B of 1.83.

These are just a few of the metrics contributing to PB's Value grade of B and CFR's Value grade of D.

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


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Cullen/Frost Bankers, Inc. (CFR) - free report >>

Prosperity Bancshares, Inc. (PB) - free report >>

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