Investors looking for stocks in the Banks - Midwest sector might want to consider either QCR Holdings (QCRH - Free Report) or Lakeland Financial (LKFN - 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both QCR Holdings and Lakeland Financial are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
QCRH currently has a forward P/E ratio of 14.69, while LKFN has a forward P/E of 16.40. We also note that QCRH has a PEG ratio of 1.47. 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. LKFN currently has a PEG ratio of 1.64.
Another notable valuation metric for QCRH is its P/B ratio of 1.88. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, LKFN has a P/B of 2.63.
These are just a few of the metrics contributing to QCRH's Value grade of B and LKFN's Value grade of C.
Both QCRH and LKFN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that QCRH is the superior value option right now.