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FMBH vs. WBS: Which Stock Should Value Investors Buy Now?

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Investors interested in Banks - Northeast stocks are likely familiar with First Mid-Illinois Bancshares (FMBH - Free Report) and Webster Financial (WBS - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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.

Both First Mid-Illinois Bancshares and Webster Financial have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.

FMBH currently has a forward P/E ratio of 14.64, while WBS has a forward P/E of 17.01. We also note that FMBH has a PEG ratio of 1.63. 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. WBS currently has a PEG ratio of 2.13.

Another notable valuation metric for FMBH is its P/B ratio of 1.43. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, WBS has a P/B of 2.16.

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

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


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Webster Financial Corporation (WBS) - free report >>

First Mid Bancshares, Inc. (FMBH) - free report >>