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WBS or WASH: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Banks - Northeast sector might want to consider either Webster Financial (WBS - Free Report) or Washington Trust Bancorp (WASH - 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.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Webster Financial and Washington Trust Bancorp are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that WBS likely has seen a stronger improvement to its earnings outlook than WASH has recently. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

WBS currently has a forward P/E ratio of 9.57, while WASH has a forward P/E of 10.86. We also note that WBS has a PEG ratio of 0.71. 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. WASH currently has a PEG ratio of 0.89.

Another notable valuation metric for WBS is its P/B ratio of 1.03. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, WASH has a P/B of 1.04.

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

WBS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that WBS is likely the superior value option right now.


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