Investors looking for stocks in the Banks - Southeast sector might want to consider either Summit Financial (SMMF - Free Report) or City Holding (CHCO - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Both Summit Financial and City Holding have a Zacks Rank of # 1 (Strong Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.
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.
SMMF currently has a forward P/E ratio of 11.48, while CHCO has a forward P/E of 14.83. We also note that SMMF has a PEG ratio of 1.44. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CHCO currently has a PEG ratio of 1.85.
Another notable valuation metric for SMMF is its P/B ratio of 1.42. 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, CHCO has a P/B of 2.01.
These are just a few of the metrics contributing to SMMF's Value grade of B and CHCO's Value grade of C.
Both SMMF and CHCO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SMMF is the superior value option right now.