LYG or DBSDY: Which Is the Better Value Stock Right Now?

Investors interested in Banks - Foreign stocks are likely familiar with Lloyds (LYG) and DBS Group Holdings Ltd (DBSDY). 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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, both Lloyds and DBS Group Holdings Ltd are sporting a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle for value investors.

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.

LYG currently has a forward P/E ratio of 10.49, while DBSDY has a forward P/E of 12.12. We also note that LYG has a PEG ratio of 0.86. 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. DBSDY currently has a PEG ratio of 7.72.

Another notable valuation metric for LYG is its P/B ratio of 1.03. 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, DBSDY has a P/B of 1.98.

These are just a few of the metrics contributing to LYG's Value grade of B and DBSDY's Value grade of D.

Both LYG and DBSDY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LYG is the superior value option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research