Investors interested in Banks - Southeast stocks are likely familiar with Summit Financial (SMMF - Free Report) and WesBanco (WSBC - 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Summit Financial and WesBanco are both sporting a Zacks Rank of #2 (Buy) right now. 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 factor that value investors are interested in.
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.
SMMF currently has a forward P/E ratio of 11.22, while WSBC has a forward P/E of 15.66. We also note that SMMF has a PEG ratio of 1.40. 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. WSBC currently has a PEG ratio of 1.57.
Another notable valuation metric for SMMF is its P/B ratio of 1.53. 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, WSBC has a P/B of 1.56.
These metrics, and several others, help SMMF earn a Value grade of B, while WSBC has been given a Value grade of C.
Both SMMF and WSBC are impressive stocks with improving earnings outlooks. But considering the above metrics, value investors will likely feel that SMMF is the better option right now.