Investors with an interest in Banks - Southeast stocks have likely encountered both Franklin Financial Network (FSB - Free Report) and City Holding (CHCO - 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Franklin Financial Network has a Zacks Rank of #2 (Buy), while City Holding has a Zacks Rank of #3 (Hold) right now. This means that FSB's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
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.
FSB currently has a forward P/E ratio of 13.84, while CHCO has a forward P/E of 16.60. We also note that FSB has a PEG ratio of 1.38. 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. CHCO currently has a PEG ratio of 2.07.
Another notable valuation metric for FSB is its P/B ratio of 1.61. 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, CHCO has a P/B of 2.48.
These are just a few of the metrics contributing to FSB's Value grade of B and CHCO's Value grade of C.
FSB has seen stronger estimate revision activity and sports more attractive valuation metrics than CHCO, so it seems like value investors will conclude that FSB is the superior option right now.