Back to top

Image: Bigstock

SMMF or CHCO: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in stocks from the Banks - Southeast sector have probably already heard of Summit Financial (SMMF - Free Report) and City Holding (CHCO - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Summit Financial and City Holding are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.

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.

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 11.83, while CHCO has a forward P/E of 16.52. We also note that SMMF has a PEG ratio of 1.48. 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. CHCO currently has a PEG ratio of 2.06.

Another notable valuation metric for SMMF is its P/B ratio of 1.62. 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, CHCO has a P/B of 2.43.

These metrics, and several others, help SMMF earn a Value grade of B, while CHCO has been given a Value grade of D.

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


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


City Holding Company (CHCO) - free report >>

Summit Financial Group, Inc. (SMMF) - free report >>