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PB vs. BANC: Which Stock Is the Better Value Option?

Investors with an interest in Banks - Southwest stocks have likely encountered both Prosperity Bancshares (PB) and Banc of California (BANC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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.

Prosperity Bancshares has a Zacks Rank of #2 (Buy), while Banc of California has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PB has an improving earnings outlook. But this is just one piece of the puzzle 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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

PB currently has a forward P/E ratio of 12.49, while BANC has a forward P/E of 22.90. We also note that PB has a PEG ratio of 1.25. 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. BANC currently has a PEG ratio of 2.29.

Another notable valuation metric for PB is its P/B ratio of 0.78. 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, BANC has a P/B of 1.09.

Based on these metrics and many more, PB holds a Value grade of B, while BANC has a Value grade of C.

PB has seen stronger estimate revision activity and sports more attractive valuation metrics than BANC, so it seems like value investors will conclude that PB is the superior option right now.


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Prosperity Bancshares, Inc. (PB): Free Stock Analysis Report
 
Banc of California, Inc. (BANC): Free Stock Analysis Report
 
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