Back to top

Image: Bigstock

WAL vs. BOH: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in stocks from the Banks - West sector have probably already heard of Western Alliance (WAL) and Bank of Hawaii (BOH). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Currently, Western Alliance has 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. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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 9.52, while BOH has a forward P/E of 14.11. We also note that WAL has a PEG ratio of 0.63. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BOH currently has a PEG ratio of 1.76.

Another notable valuation metric for WAL is its P/B ratio of 1.68. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BOH has a P/B of 2.42.

Based on these metrics and many more, WAL holds a Value grade of B, while BOH has a Value grade of C.

WAL has seen stronger estimate revision activity and sports more attractive valuation metrics than BOH, so it seems like value investors will conclude that WAL is the superior option right now.

Published in