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STBZ vs. CHCO: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Banks - Southeast sector might want to consider either State Bank Financial or City Holding (CHCO - 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, both State Bank Financial and City Holding are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.

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.

STBZ currently has a forward P/E ratio of 10.62, while CHCO has a forward P/E of 14.22. We also note that STBZ has a PEG ratio of 0.79. 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. CHCO currently has a PEG ratio of 1.78.

Another notable valuation metric for STBZ is its P/B ratio of 1.37. 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, CHCO has a P/B of 2.16.

These are just a few of the metrics contributing to STBZ's Value grade of B and CHCO's Value grade of C.

Both STBZ and CHCO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that STBZ is the superior value option right now.


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