Investors with an interest in Banks - Foreign stocks have likely encountered both ING Groep (ING) and Banco Santander-Chile (BSAC). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
ING Groep and Banco Santander-Chile are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that ING's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
ING currently has a forward P/E ratio of 9.32, while BSAC has a forward P/E of 11.76. We also note that ING has a PEG ratio of 1.99. 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. BSAC currently has a PEG ratio of 3.45.
Another notable valuation metric for ING is its P/B ratio of 0.49. 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, BSAC has a P/B of 1.51.
These metrics, and several others, help ING earn a Value grade of A, while BSAC has been given a Value grade of C.
ING is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ING is likely the superior value option right now.
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ING Group, N.V. (ING): 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.