Investors interested in stocks from the Banks - Major Regional sector have probably already heard of U.S. Bancorp (USB) and BNY (BNY). 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.
Right now, both U.S. Bancorp and BNY are sporting a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
USB currently has a forward P/E ratio of 11.95, while BNY has a forward P/E of 16.80. We also note that USB has a PEG ratio of 1.05. 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. BNY currently has a PEG ratio of 1.10.
Another notable valuation metric for USB is its P/B ratio of 1.59. 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, BNY has a P/B of 2.58.
These metrics, and several others, help USB earn a Value grade of B, while BNY has been given a Value grade of F.
Both USB and BNY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that USB is the superior value option right now.
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U.S. Bancorp (USB): Free Stock Analysis Report
BNY (BNY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).