Investors looking for stocks in the Banks - Major Regional sector might want to consider either Citigroup (C) or Bank of America (BAC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Citigroup and Bank of America are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.
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.
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.
C currently has a forward P/E ratio of 9.06, while BAC has a forward P/E of 11.36. We also note that C 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. BAC currently has a PEG ratio of 1.26.
Another notable valuation metric for C is its P/B ratio of 0.97. 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, BAC has a P/B of 1.29.
These metrics, and several others, help C earn a Value grade of B, while BAC has been given a Value grade of C.
Both C and BAC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that C is the superior value option right now.