Investors looking for stocks in the Banks - Southeast sector might want to consider either Summit Financial (SMMF - Free Report) or National Bank Holdings (NBHC - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 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.
Currently, both Summit Financial and National Bank Holdings are holding 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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
SMMF currently has a forward P/E ratio of 11.62, while NBHC has a forward P/E of 15.02. We also note that SMMF has a PEG ratio of 1.45. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NBHC currently has a PEG ratio of 1.50.
Another notable valuation metric for SMMF is its P/B ratio of 1.41. 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, NBHC has a P/B of 1.57.
Based on these metrics and many more, SMMF holds a Value grade of A, while NBHC has a Value grade of D.
Both SMMF and NBHC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SMMF is the superior value option right now.