Investors interested in stocks from the Banks - West sector have probably already heard of Western Alliance (WAL - Free Report) and Bank of Hawaii (BOH - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Western Alliance and Bank of Hawaii are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
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.
WAL currently has a forward P/E ratio of 11.67, while BOH has a forward P/E of 17.05. We also note that WAL has a PEG ratio of 0.78. 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. BOH currently has a PEG ratio of 2.13.
Another notable valuation metric for WAL is its P/B ratio of 2.02. 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, BOH has a P/B of 2.93.
These are just a few of the metrics contributing to WAL's Value grade of B and BOH's Value grade of C.
Both WAL and BOH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that WAL is the superior value option right now.