Investors interested in Banks - Northeast stocks are likely familiar with First Mid-Illinois Bancshares (FMBH) and Webster Financial (WBS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
First Mid-Illinois Bancshares and Webster Financial are both sporting a Zacks Rank of #2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.
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.
FMBH currently has a forward P/E ratio of 13.83, while WBS has a forward P/E of 18.21. We also note that FMBH has a PEG ratio of 1.54. 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. WBS currently has a PEG ratio of 2.28.
Another notable valuation metric for FMBH is its P/B ratio of 1.54. 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, WBS has a P/B of 2.31.
These metrics, and several others, help FMBH earn a Value grade of B, while WBS has been given a Value grade of D.
Both FMBH and WBS are impressive stocks with improving earnings outlooks. But considering the above metrics, value investors will likely feel that FMBH is the better option right now.
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First Mid-Illinois Bancshares, Inc. (FMBH): Free Stock Analysis Report
Webster Financial Corporation (WBS): Free Stock Analysis Report
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