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FITB vs. NTRS: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Banks - Major Regional sector have probably already heard of Fifth Third Bancorp (FITB - Free Report) and Northern Trust Corporation (NTRS - 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, both Fifth Third Bancorp and Northern Trust Corporation are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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 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.

FITB currently has a forward P/E ratio of 10.49, while NTRS has a forward P/E of 12.63. We also note that FITB has a PEG ratio of 1.27. 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. NTRS currently has a PEG ratio of 4.91.

Another notable valuation metric for FITB is its P/B ratio of 1.33. 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, NTRS has a P/B of 1.48.

These are just a few of the metrics contributing to FITB's Value grade of A and NTRS's Value grade of F.

Both FITB and NTRS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FITB is the superior value option right now.


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Fifth Third Bancorp (FITB) - free report >>

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