Investors interested in Banks - Foreign stocks are likely familiar with Toronto-Dominion Bank (TD) and ICICI Bank Limited (IBN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Right now, Toronto-Dominion Bank is sporting a Zacks Rank of #2 (Buy), while ICICI Bank Limited 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 TD is likely seeing its earnings outlook improve to a greater extent. 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 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.
TD currently has a forward P/E ratio of 13.03, while IBN has a forward P/E of 20.80. We also note that TD has a PEG ratio of 1.68. 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. IBN currently has a PEG ratio of 2.23.
Another notable valuation metric for TD is its P/B ratio of 1.58. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, IBN has a P/B of 3.14.
Based on these metrics and many more, TD holds a Value grade of B, while IBN has a Value grade of C.
TD stands above IBN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TD is the superior value option right now.
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Toronto Dominion Bank (The) (TD): Free Stock Analysis Report ICICI Bank Limited (IBN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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