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FBP vs. CHCO: Which Stock Should Value Investors Buy Now?

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Investors interested in Banks - Southeast stocks are likely familiar with First Bancorp (FBP - Free Report) and 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, First Bancorp is sporting a Zacks Rank of #2 (Buy), while City Holding has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FBP has 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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

FBP currently has a forward P/E ratio of 14.74, while CHCO has a forward P/E of 15.09. We also note that FBP has a PEG ratio of 1.09. 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. CHCO currently has a PEG ratio of 1.89.

Another notable valuation metric for FBP is its P/B ratio of 1.19. 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, CHCO has a P/B of 2.12.

These metrics, and several others, help FBP earn a Value grade of B, while CHCO has been given a Value grade of C.

FBP sticks out from CHCO in both our Zacks Rank and Style Scores models, so value investors will likely feel that FBP is the better option right now.


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