Investors with an interest in Banks - West stocks have likely encountered both Preferred Bank (PFBC) and Peoples Utah Bancorp (PUB). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Preferred Bank and Peoples Utah Bancorp are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PFBC 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.
PFBC currently has a forward P/E ratio of 8.13, while PUB has a forward P/E of 11.14. We also note that PFBC has a PEG ratio of 0.81. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PUB currently has a PEG ratio of 1.39.
Another notable valuation metric for PFBC is its P/B ratio of 1.34. 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, PUB has a P/B of 1.64.
Based on these metrics and many more, PFBC holds a Value grade of A, while PUB has a Value grade of C.
PFBC stands above PUB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PFBC is the superior value option right now.
Preferred Bank (PFBC): Free Stock Analysis Report
People's Utah Bancorp (PUB): Free Stock Analysis Report
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