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FCCY vs. WBS: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Banks - Northeast sector might want to consider either 1st Constitution Bancorp or Webster Financial (WBS - 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, both 1st Constitution Bancorp and Webster Financial are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

FCCY currently has a forward P/E ratio of 14.49, while WBS has a forward P/E of 17.73. We also note that FCCY has a PEG ratio of 1.81. 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. WBS currently has a PEG ratio of 2.22.

Another notable valuation metric for FCCY is its P/B ratio of 1.47. 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, WBS has a P/B of 2.28.

These metrics, and several others, help FCCY earn a Value grade of B, while WBS has been given a Value grade of C.

Both FCCY and WBS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FCCY is the superior value option right now.


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