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.
Currently, Banner has a Zacks Rank of #2 (Buy), while Heritage Financial has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BANR is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
BANR currently has a forward P/E ratio of 12.73, while HFWA has a forward P/E of 14.42. We also note that BANR has a PEG ratio of 1.82. 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. HFWA currently has a PEG ratio of 2.06.
Another notable valuation metric for BANR is its P/B ratio of 1.39. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HFWA has a P/B of 1.51.
These are just a few of the metrics contributing to BANR's Value grade of B and HFWA's Value grade of D.
BANR stands above HFWA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BANR is the superior value option right now.