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Investors with an interest in Financial - Savings and Loan stocks have likely encountered both Flushing Financial (FFIC) and People's United (PBCT). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Flushing Financial is sporting a Zacks Rank of #2 (Buy), while People's United has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that FFIC likely has seen a stronger improvement to its earnings outlook than PBCT has recently. However, value investors will care about much more than just this.
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.
FFIC currently has a forward P/E ratio of 6.04, while PBCT has a forward P/E of 10.43. We also note that FFIC has a PEG ratio of 0.69. 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. PBCT currently has a PEG ratio of 5.22.
Another notable valuation metric for FFIC is its P/B ratio of 0.52. 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, PBCT has a P/B of 0.72.
These metrics, and several others, help FFIC earn a Value grade of B, while PBCT has been given a Value grade of C.
FFIC sticks out from PBCT in both our Zacks Rank and Style Scores models, so value investors will likely feel that FFIC is the better option right now.
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