Investors interested in Banks - Northeast stocks are likely familiar with First Mid-Illinois Bancshares (FMBH - Free Report) and Community Bank System (CBU - 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 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.
Right now, First Mid-Illinois Bancshares is sporting a Zacks Rank of #2 (Buy), while Community Bank System has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FMBH has an improving earnings outlook. 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.
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.
FMBH currently has a forward P/E ratio of 14.73, while CBU has a forward P/E of 20.31. We also note that FMBH has a PEG ratio of 1.64. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CBU currently has a PEG ratio of 2.54.
Another notable valuation metric for FMBH is its P/B ratio of 1.43. 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, CBU has a P/B of 2.01.
These metrics, and several others, help FMBH earn a Value grade of B, while CBU has been given a Value grade of D.
FMBH has seen stronger estimate revision activity and sports more attractive valuation metrics than CBU, so it seems like value investors will conclude that FMBH is the superior option right now.