Investors looking for stocks in the Banks - Midwest sector might want to consider either Huntington Bancshares (HBAN - Free Report) or Lakeland Financial (LKFN - 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.
Currently, both Huntington Bancshares and Lakeland Financial are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
HBAN currently has a forward P/E ratio of 12.74, while LKFN has a forward P/E of 15.52. We also note that HBAN has a PEG ratio of 0.87. 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. LKFN currently has a PEG ratio of 1.55.
Another notable valuation metric for HBAN is its P/B ratio of 1.70. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, LKFN has a P/B of 2.47.
These metrics, and several others, help HBAN earn a Value grade of B, while LKFN has been given a Value grade of C.
Both HBAN and LKFN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HBAN is the superior value option right now.