Investors looking for stocks in the Banks - Southeast sector might want to consider either Pinnacle Financial (PNFP - Free Report) or 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.
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.
Pinnacle Financial and City Holding are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
PNFP currently has a forward P/E ratio of 10.31, while CHCO has a forward P/E of 13.81. We also note that PNFP has a PEG ratio of 0.74. 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 1.73.
Another notable valuation metric for PNFP is its P/B ratio of 1. 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, CHCO has a P/B of 1.90.
Based on these metrics and many more, PNFP holds a Value grade of B, while CHCO has a Value grade of C.
Both PNFP and CHCO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PNFP is the superior value option right now.