Investors with an interest in Banks - West stocks have likely encountered both Western Alliance (WAL) and Bank of Hawaii (BOH). 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Western Alliance is sporting a Zacks Rank of #2 (Buy), while Bank of Hawaii has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that WAL likely has seen a stronger improvement to its earnings outlook than BOH has recently. But this is only part of the picture 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
WAL currently has a forward P/E ratio of 11.38, while BOH has a forward P/E of 16.51. We also note that WAL has a PEG ratio of 0.76. 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. BOH currently has a PEG ratio of 2.06.
Another notable valuation metric for WAL is its P/B ratio of 2. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, BOH has a P/B of 2.83.
Based on these metrics and many more, WAL holds a Value grade of B, while BOH has a Value grade of C.
WAL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that WAL is likely the superior value option right now.