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FHN vs. FBNC: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Banks - Southeast sector might want to consider either First Horizon National (FHN) or First Bancorp (FBNC - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

First Horizon National has a Zacks Rank of #2 (Buy), while First Bancorp has a Zacks Rank of #4 (Sell) 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. However, value investors will care about much more than just this.

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 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.

FHN currently has a forward P/E ratio of 10.07, while FBNC has a forward P/E of 11.89. We also note that FHN has a PEG ratio of 1.24. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FBNC currently has a PEG ratio of 3.60.

Another notable valuation metric for FHN is its P/B ratio of 1.03. 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 1.30.

These metrics, and several others, help FHN earn a Value grade of B, while FBNC has been given 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.


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