Investors looking for stocks in the Banks - Northeast sector might want to consider either Midland States Bancorp, Inc. (MSBI - Free Report) or Washington Federal (WAFD - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Midland States Bancorp, Inc. and Washington Federal are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MSBI has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
MSBI currently has a forward P/E ratio of 11.01, while WAFD has a forward P/E of 11.24. We also note that MSBI has a PEG ratio of 1.57. 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. WAFD currently has a PEG ratio of 1.61.
Another notable valuation metric for MSBI is its P/B ratio of 1.08. 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, WAFD has a P/B of 1.18.
Based on these metrics and many more, MSBI holds a Value grade of B, while WAFD has a Value grade of C.
MSBI stands above WAFD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MSBI is the superior value option right now.