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CUBI vs. FHN: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Banks - Southeast sector might want to consider either Customers Bancorp (CUBI - Free Report) or First Horizon National (FHN - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Customers Bancorp and First Horizon National are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that CUBI likely has seen a stronger improvement to its earnings outlook than FHN has recently. However, value investors will care about much more than just this.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CUBI currently has a forward P/E ratio of 10.32, while FHN has a forward P/E of 12.36. We also note that CUBI has a PEG ratio of 1.03. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FHN currently has a PEG ratio of 1.77.

Another notable valuation metric for CUBI is its P/B ratio of 1.29. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FHN has a P/B of 1.30.

These are just a few of the metrics contributing to CUBI's Value grade of A and FHN's Value grade of C.

CUBI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CUBI is likely the superior value option right now.


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