Investors looking for stocks in the Banks - Southeast sector might want to consider either F.N.B. (FNB) or Iberiabank . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both F.N.B. and Iberiabank are sporting 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 only part of the picture for value investors.
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 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.
FNB currently has a forward P/E ratio of 8.86, while IBKC has a forward P/E of 9.70. We also note that FNB has a PEG ratio of 0.93. 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. IBKC currently has a PEG ratio of 1.21.
Another notable valuation metric for FNB is its P/B ratio of 0.74. 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, IBKC has a P/B of 0.99.
These are just a few of the metrics contributing to FNB's Value grade of B and IBKC's Value grade of C.
Both FNB and IBKC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FNB is the superior value option right now.