Investors looking for stocks in the Banks - West sector might want to consider either Western Alliance (WAL - Free Report) or Bank of Hawaii (BOH - 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Western Alliance has a Zacks Rank of #2 (Buy), while Bank of Hawaii has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that WAL likely has seen a stronger improvement to its earnings outlook than BOH 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.
WAL currently has a forward P/E ratio of 8.68, while BOH has a forward P/E of 13.53. We also note that WAL has a PEG ratio of 0.77. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BOH currently has a PEG ratio of 1.80.
Another notable valuation metric for WAL is its P/B ratio of 1.63. 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, BOH has a P/B of 2.47.
These metrics, and several others, help WAL earn a Value grade of A, while BOH has been given a Value grade of C.
WAL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that WAL is likely the superior value option right now.