Investors with an interest in Banks - Foreign stocks have likely encountered both Shinhan Financial (SHG) and Canadian Imperial Bank (CM). 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 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.
Shinhan Financial and Canadian Imperial Bank are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that SHG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
SHG currently has a forward P/E ratio of 5.28, while CM has a forward P/E of 11.90. We also note that SHG has a PEG ratio of 0.46. 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 1.47.
Another notable valuation metric for SHG is its P/B ratio of 0.45. 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, CM has a P/B of 1.55.
These metrics, and several others, help SHG earn a Value grade of A, while CM has been given a Value grade of C.
SHG 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 SHG is likely the superior value option right now.
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Today, See These 5 Potential Home Runs >>Shinhan Financial Group Co Ltd (SHG) : Free Stock Analysis Report
Canadian Imperial Bank of Commerce (CM) : 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.
