Investors interested in stocks from the Banks - Foreign sector have probably already heard of Erste Group Bank AG (EBKDY) and HDFC Bank (HDB). 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.
Currently, both Erste Group Bank AG and HDFC Bank are holding a Zacks Rank of # 2 (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 just one piece of the puzzle 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 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.
EBKDY currently has a forward P/E ratio of 6.13, while HDB has a forward P/E of 20.81. We also note that EBKDY has a PEG ratio of 0.78. 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. HDB currently has a PEG ratio of 1.21.
Another notable valuation metric for EBKDY is its P/B ratio of 0.77. 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, HDB has a P/B of 2.12.
These metrics, and several others, help EBKDY earn a Value grade of B, while HDB has been given a Value grade of C.
Both EBKDY and HDB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EBKDY is the superior value option right now.
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Free: See Our Top Stock and 4 Runners Up >>Erste Group Bank AG (EBKDY) : Free Stock Analysis Report
HDFC Bank Limited (HDB) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
