Investors with an interest in Banks - West stocks have likely encountered both Bank of Hawaii (BOH) and East West Bancorp (EWBC). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Bank of Hawaii has a Zacks Rank of #2 (Buy), while East West Bancorp has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that BOH likely has seen a stronger improvement to its earnings outlook than EWBC has recently. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
BOH currently has a forward P/E ratio of 11.27, while EWBC has a forward P/E of 11.78. We also note that BOH has a PEG ratio of 0.76. 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. EWBC currently has a PEG ratio of 1.40.
Another notable valuation metric for BOH is its P/B ratio of 1.71. 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, EWBC has a P/B of 1.86.
Based on these metrics and many more, BOH holds a Value grade of B, while EWBC has a Value grade of C.
BOH has seen stronger estimate revision activity and sports more attractive valuation metrics than EWBC, so it seems like value investors will conclude that BOH is the superior option right now.
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Bank of Hawaii Corporation (BOH): Free Stock Analysis Report
East West Bancorp, Inc. (EWBC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).