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

Investors looking for stocks in the Banks - Northeast sector might want to consider either Washington Trust Bancorp (WASH) or 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Washington Trust Bancorp is sporting a Zacks Rank of #2 (Buy), while Central Bancompany has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that WASH is likely seeing its earnings outlook improve to a greater extent. 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.

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.

WASH currently has a forward P/E ratio of 11.47, while CBC has a forward P/E of 17.00. We also note that WASH has a PEG ratio of 0.80. 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. CBC currently has a PEG ratio of 2.61.

Another notable valuation metric for WASH is its P/B ratio of 1.28. 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, CBC has a P/B of 2.01.

These metrics, and several others, help WASH earn a Value grade of B, while CBC has been given a Value grade of D.

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

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

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