Investors looking for stocks in the Banks - Midwest sector might want to consider either Associated Banc-Corp (ASB) or Commerce Bancshares (CBSH). 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.
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.
Associated Banc-Corp has a Zacks Rank of #2 (Buy), while Commerce Bancshares has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ASB has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ASB currently has a forward P/E ratio of 8.33, while CBSH has a forward P/E of 11.68. We also note that ASB has a PEG ratio of 1.10. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CBSH currently has a PEG ratio of 2.40.
Another notable valuation metric for ASB is its P/B ratio of 0.86. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CBSH has a P/B of 1.66.
These metrics, and several others, help ASB earn a Value grade of B, while CBSH has been given a Value grade of C.
ASB stands above CBSH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ASB is the superior value option right now.
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Associated Banc-Corp (ASB): Free Stock Analysis Report
Commerce Bancshares, Inc. (CBSH): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).