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SMMF vs. NBHC: Which Stock Should Value Investors Buy Now?
Investors with an interest in Banks - Southeast stocks have likely encountered both Summit Financial (SMMF - Free Report) and National Bank Holdings (NBHC - 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Summit Financial has a Zacks Rank of #2 (Buy), while National Bank Holdings has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SMMF is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SMMF currently has a forward P/E ratio of 11.61, while NBHC has a forward P/E of 14.99. We also note that SMMF has a PEG ratio of 1.45. 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. 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 is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, NBHC has a P/B of 1.53.
These are just a few of the metrics contributing to SMMF's Value grade of B and NBHC's Value grade of D.
SMMF has seen stronger estimate revision activity and sports more attractive valuation metrics than NBHC, so it seems like value investors will conclude that SMMF is the superior option right now.