BBVA or CM: Which Is the Better Value Stock Right Now?
Investors interested in Banks - Foreign stocks are likely familiar with Banco Bilbao (BBVA) and Canadian Imperial Bank (CM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 Banco Bilbao and Canadian Imperial Bank have a Zacks Rank of #2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.
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 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.
BBVA currently has a forward P/E ratio of 10.45, while CM has a forward P/E of 14.71. We also note that BBVA has a PEG ratio of 0.66. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CM currently has a PEG ratio of 1.10.
Another notable valuation metric for BBVA is its P/B ratio of 1.9. 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, CM has a P/B of 2.4.
These metrics, and several others, help BBVA earn a Value grade of A, while CM has been given a Value grade of D.
Both BBVA and CM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BBVA is the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
