Investors interested in Banks - West stocks are likely familiar with First Hawaiian (FHB - Free Report) and Bank of Hawaii (BOH - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
First Hawaiian and Bank of Hawaii are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that FHB's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
FHB currently has a forward P/E ratio of 13.68, while BOH has a forward P/E of 15.29. We also note that FHB has a PEG ratio of 1.43. 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. BOH currently has a PEG ratio of 1.80.
Another notable valuation metric for FHB is its P/B ratio of 1.55. 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, BOH has a P/B of 2.72.
These metrics, and several others, help FHB earn a Value grade of B, while BOH has been given a Value grade of C.
FHB stands above BOH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FHB is the superior value option right now.