CFG or CBC: Which Is the Better Value Stock Right Now?

Investors interested in Banks - Northeast stocks are likely familiar with Citizens Financial Group (CFG) and Central Bancompany (CBC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Both Citizens Financial Group and Central Bancompany have a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle 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.

CFG currently has a forward P/E ratio of 13.60, while CBC has a forward P/E of 16.40. We also note that CFG has a PEG ratio of 0.55. 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. CBC currently has a PEG ratio of 1.85.

Another notable valuation metric for CFG is its P/B ratio of 1.26. 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, CBC has a P/B of 2.01.

Based on these metrics and many more, CFG holds a Value grade of B, while CBC has a Value grade of D.

Both CFG and CBC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CFG is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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