Investors with an interest in Financial - Savings and Loan stocks have likely encountered both Flushing Financial (FFIC - Free Report) and New York Community Bancorp (NYCB - Free Report) . 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.
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 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, Flushing Financial is sporting a Zacks Rank of #2 (Buy), while New York Community Bancorp has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that FFIC likely has seen a stronger improvement to its earnings outlook than NYCB has recently. 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.
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.
FFIC currently has a forward P/E ratio of 5.90, while NYCB has a forward P/E of 9.80. We also note that FFIC has a PEG ratio of 0.68. 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. NYCB currently has a PEG ratio of 0.98.
Another notable valuation metric for FFIC is its P/B ratio of 0.51. 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, NYCB has a P/B of 0.62.
These are just a few of the metrics contributing to FFIC's Value grade of B and NYCB's Value grade of C.
FFIC 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 FFIC is likely the superior value option right now.