MSBI Vs. FCF: Which Stock Is The Better Value Option?

Investors looking for stocks in the Banks - Northeast sector might want to consider either Midland States Bancorp, Inc. (MSBI) or First Commonwealth Financial (FCF). But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Midland States Bancorp, Inc. has a Zacks Rank of #2 (Buy), while First Commonwealth Financial has a Zacks Rank of #3 (Hold) right now. This means that MSBI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

MSBI currently has a forward P/E ratio of 9.16, while FCF has a forward P/E of 11.68. We also note that MSBI has a PEG ratio of 1.31. 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. FCF currently has a PEG ratio of 1.46.

Another notable valuation metric for MSBI is its P/B ratio of 0.96. 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, FCF has a P/B of 1.31.

These are just a few of the metrics contributing to MSBI's Value grade of B and FCF's Value grade of C.

MSBI sticks out from FCF in both our Zacks Rank and Style Scores models, so value investors will likely feel that MSBI is the better option right now.