Investors interested in stocks from the Banks - Midwest sector have probably already heard of Wintrust Financial (WTFC - Free Report) and Lakeland Financial (LKFN - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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, Wintrust Financial has a Zacks Rank of #2 (Buy), while Lakeland Financial has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that WTFC likely has seen a stronger improvement to its earnings outlook than LKFN has recently. However, value investors will care about much more than just this.
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 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.
WTFC currently has a forward P/E ratio of 12.74, while LKFN has a forward P/E of 14.84. We also note that WTFC has a PEG ratio of 0.94. 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 1.48.
Another notable valuation metric for WTFC is its P/B ratio of 1.43. 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 2.33.
These are just a few of the metrics contributing to WTFC's Value grade of B and LKFN's Value grade of C.
WTFC sticks out from LKFN in both our Zacks Rank and Style Scores models, so value investors will likely feel that WTFC is the better option right now.