USB vs. NTRS: Which Stock Is the Better Value Option?

Investors looking for stocks in the Banks - Major Regional sector might want to consider either U.S. Bancorp (USB) or Northern Trust Corporation (NTRS). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

U.S. Bancorp and Northern Trust Corporation are both sporting 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 analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

USB currently has a forward P/E ratio of 10.13, while NTRS has a forward P/E of 13.64. We also note that USB has a PEG ratio of 0.91. 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. NTRS currently has a PEG ratio of 1.08.

Another notable valuation metric for USB is its P/B ratio of 1.35. 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, NTRS has a P/B of 2.14.

Based on these metrics and many more, USB holds a Value grade of B, while NTRS has a Value grade of F.

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

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U.S. Bancorp (USB): Free Stock Analysis Report

Northern Trust Corporation (NTRS): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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