Back to top

Image: Bigstock

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

Read MoreHide Full Article

Investors interested in stocks from the Banks - Southeast sector have probably already heard of First Bancorp (FBP - Free Report) and City Holding (CHCO - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

First Bancorp has a Zacks Rank of #2 (Buy), while City Holding has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that FBP likely has seen a stronger improvement to its earnings outlook than CHCO has recently. 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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

FBP currently has a forward P/E ratio of 13.24, while CHCO has a forward P/E of 14.05. We also note that FBP has a PEG ratio of 0.98. 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 1.76.

Another notable valuation metric for FBP is its P/B ratio of 1.07. 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, CHCO has a P/B of 1.99.

These are just a few of the metrics contributing to FBP's Value grade of B and CHCO's Value grade of C.

FBP stands above CHCO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FBP is the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


City Holding Company (CHCO) - free report >>

First BanCorp. (FBP) - free report >>

Published in