Investors interested in stocks from the Banks - West sector have probably already heard of First Hawaiian (FHB - Free Report) and CoBiz Financial (COBZ - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
First Hawaiian and CoBiz Financial are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that FHB's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
FHB currently has a forward P/E ratio of 14.91, while COBZ has a forward P/E of 17.68. We also note that FHB has a PEG ratio of 1.65. 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. COBZ currently has a PEG ratio of 1.77.
Another notable valuation metric for FHB is its P/B ratio of 1.66. 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, COBZ has a P/B of 2.73.
Based on these metrics and many more, FHB holds a Value grade of B, while COBZ has a Value grade of C.
FHB has seen stronger estimate revision activity and sports more attractive valuation metrics than COBZ, so it seems like value investors will conclude that FHB is the superior option right now.