Investors interested in Banks - Foreign stocks are likely familiar with Mizuho (MFG) and Bank of Nova Scotia (BNS). 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, Mizuho has a Zacks Rank of #2 (Buy), while Bank of Nova Scotia has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MFG is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
MFG currently has a forward P/E ratio of 10.04, while BNS has a forward P/E of 11.15. We also note that MFG has a PEG ratio of 0.63. 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. BNS currently has a PEG ratio of 1.39.
Another notable valuation metric for MFG is its P/B ratio of 1. 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, BNS has a P/B of 1.28.
These metrics, and several others, help MFG earn a Value grade of B, while BNS has been given a Value grade of C.
MFG stands above BNS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MFG is the superior value option right now.
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Free: See Our Top Stock And 4 Runners UpMizuho Financial Group, Inc. (MFG) : Free Stock Analysis Report
Bank of Nova Scotia (The) (BNS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
