Investors looking for stocks in the Banks - Southeast sector might want to consider either First Horizon National (FHN - Free Report) or First Bancorp (FBNC - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
First Horizon National has a Zacks Rank of #2 (Buy), while First Bancorp has a Zacks Rank of #3 (Hold) right now. This means that FHN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
FHN currently has a forward P/E ratio of 9.76, while FBNC has a forward P/E of 11.77. We also note that FHN has a PEG ratio of 1.56. 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. FBNC currently has a PEG ratio of 2.68.
Another notable valuation metric for FHN is its P/B ratio of 0.96. 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, FBNC has a P/B of 1.37.
Based on these metrics and many more, FHN holds a Value grade of B, while FBNC has a Value grade of C.
FHN has seen stronger estimate revision activity and sports more attractive valuation metrics than FBNC, so it seems like value investors will conclude that FHN is the superior option right now.