Investors with an interest in Banks - Northeast stocks have likely encountered both Atlantic Capital Bancshares (ACBI - Free Report) and Independent Bank Corp. (INDB - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Atlantic Capital Bancshares has a Zacks Rank of #1 (Strong Buy), while Independent Bank Corp. has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ACBI has an improving earnings outlook. But this is just one piece of the puzzle 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.
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.
ACBI currently has a forward P/E ratio of 14.28, while INDB has a forward P/E of 14.46. We also note that ACBI has a PEG ratio of 1.86. 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. INDB currently has a PEG ratio of 2.37.
Another notable valuation metric for ACBI is its P/B ratio of 1.22. 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, INDB has a P/B of 1.66.
Based on these metrics and many more, ACBI holds a Value grade of B, while INDB has a Value grade of C.
ACBI stands above INDB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ACBI is the superior value option right now.