Investors interested in stocks from the Financial - Savings and Loan sector have probably already heard of Banner (BANR - Free Report) and Heritage Financial (HFWA - 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Banner and Heritage Financial are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that BANR likely has seen a stronger improvement to its earnings outlook than HFWA has recently. 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.
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.
BANR currently has a forward P/E ratio of 14.95, while HFWA has a forward P/E of 19.60. We also note that BANR has a PEG ratio of 2.14. 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. HFWA currently has a PEG ratio of 2.80.
Another notable valuation metric for BANR is its P/B ratio of 1.52. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, HFWA has a P/B of 1.73.
Based on these metrics and many more, BANR holds a Value grade of B, while HFWA has a Value grade of D.
BANR is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BANR is likely the superior value option right now.