Investors looking for stocks in the Financial - Savings and Loan sector might want to consider either Banner (BANR - Free Report) or Heritage Financial (HFWA - 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.
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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Banner has a Zacks Rank of #1 (Strong Buy), while Heritage Financial has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that BANR likely has seen a stronger improvement to its earnings outlook than HFWA has recently. 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
BANR currently has a forward P/E ratio of 17.34, while HFWA has a forward P/E of 20.20. We also note that BANR has a PEG ratio of 1.73. 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. HFWA currently has a PEG ratio of 2.02.
Another notable valuation metric for BANR is its P/B ratio of 1.65. 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, HFWA has a P/B of 1.91.
These metrics, and several others, help BANR earn a Value grade of B, while HFWA has been given a Value grade of C.
BANR stands above HFWA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BANR is the superior value option right now.