Investors looking for stocks in the Banks - Northeast sector might want to consider either Washington Federal (WAFD - Free Report) or Nicolet Bankshares (NCBS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Washington Federal and Nicolet Bankshares are both sporting a Zacks Rank of # 2 (Buy) right now. 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 also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
WAFD currently has a forward P/E ratio of 12.78, while NCBS has a forward P/E of 13.20. We also note that WAFD has a PEG ratio of 1.83. 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. NCBS currently has a PEG ratio of 1.89.
Another notable valuation metric for WAFD is its P/B ratio of 1.31. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, NCBS has a P/B of 1.42.
Based on these metrics and many more, WAFD holds a Value grade of B, while NCBS has a Value grade of C.
Both WAFD and NCBS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that WAFD is the superior value option right now.