Investors with an interest in Banks - Northeast stocks have likely encountered both 1st Constitution Bancorp (FCCY - Free Report) and Community Bank System (CBU - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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, both 1st Constitution Bancorp and Community Bank System are sporting a Zacks Rank of #2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.
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.
FCCY currently has a forward P/E ratio of 15.18, while CBU has a forward P/E of 19.09. We also note that FCCY has a PEG ratio of 1.52. 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. CBU currently has a PEG ratio of 2.39.
Another notable valuation metric for FCCY is its P/B ratio of 1.56. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, CBU has a P/B of 1.85.
These metrics, and several others, help FCCY earn a Value grade of B, while CBU has been given a Value grade of D.
FCCY and CBU are currently sporting an improving earnings outlook, which makes them stick out in our Zacks Rank model. However, based on the above valuation metrics, we feel that FCCY is likely the superior value option right now.