Investors interested in Banks - Major Regional stocks are likely familiar with Citigroup (C) and Bank of America (BAC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Citigroup and Bank of America have a Zacks Rank of # 2 (Buy) right now. 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 only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
C currently has a forward P/E ratio of 9.22, while BAC has a forward P/E of 11.19. We also note that C has a PEG ratio of 0.79. 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. BAC currently has a PEG ratio of 1.24.
Another notable valuation metric for C is its P/B ratio of 0.99. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BAC has a P/B of 1.27.
These are just a few of the metrics contributing to C's Value grade of B and BAC's Value grade of C.
Both C and BAC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that C is the superior value option right now.
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Citigroup Inc. (C) : Free Stock Analysis Report
Bank of America Corporation (BAC) : Free Stock Analysis Report
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