Investors looking for stocks in the Banks - Foreign sector might want to consider either Mizuho (MFG) or Nu Holdings Ltd. (NU). 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.
Both Mizuho and Nu Holdings Ltd. have a Zacks Rank of #2 (Buy) right now. 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 only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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 10.80, while NU has a forward P/E of 23.07. We also note that MFG has a PEG ratio of 0.68. 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. NU currently has a PEG ratio of 0.71.
Another notable valuation metric for MFG is its P/B ratio of 1.07. 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, NU has a P/B of 7.06.
These metrics, and several others, help MFG earn a Value grade of B, while NU has been given a Value grade of D.
Both MFG and NU are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MFG is the superior value option right now.
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Mizuho Financial Group, Inc. (MFG): Free Stock Analysis Report Nu Holdings Ltd. (NU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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