DB or CM: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Banks - Foreign sector have probably already heard of Deutsche Bank (DB) and Canadian Imperial Bank (CM). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, both Deutsche Bank and Canadian Imperial Bank are holding a Zacks Rank of # 1 (Strong 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 tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
DB currently has a forward P/E ratio of 5.59, while CM has a forward P/E of 8.60. We also note that DB has a PEG ratio of 0.70. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CM currently has a PEG ratio of 1.98.
Another notable valuation metric for DB is its P/B ratio of 0.32. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CM has a P/B of 1.12.
These metrics, and several others, help DB earn a Value grade of B, while CM has been given a Value grade of C.
Both DB and CM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DB is the superior value option right now.
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