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EWBC vs. FRC: Which Stock Should Value Investors Buy Now?

Investors looking for stocks in the Banks - West sector might want to consider either East West Bancorp (EWBC) or First Republic Bank (FRC). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, both East West Bancorp and First Republic Bank are holding 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 only part of the picture for value investors.

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.

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.

EWBC currently has a forward P/E ratio of 10.07, while FRC has a forward P/E of 21.92. We also note that EWBC has a PEG ratio of 1.01. 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. FRC currently has a PEG ratio of 2.95.

Another notable valuation metric for EWBC is its P/B ratio of 1.38. 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, FRC has a P/B of 2.28.

These metrics, and several others, help EWBC earn a Value grade of A, while FRC has been given a Value grade of C.

Both EWBC and FRC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EWBC is the superior value option right now.


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