Investors with an interest in Banks - Foreign stocks have likely encountered both Lloyds (LYG) 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.
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.
Currently, both Lloyds and Canadian Imperial Bank are holding 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. However, value investors will care about much more than just this.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
LYG currently has a forward P/E ratio of 10.89, while CM has a forward P/E of 13.19. We also note that LYG has a PEG ratio of 0.66. 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. CM currently has a PEG ratio of 1.71.
Another notable valuation metric for LYG is its P/B ratio of 1.08. 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, CM has a P/B of 1.8.
These are just a few of the metrics contributing to LYG's Value grade of B and CM's Value grade of C.
Both LYG and CM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LYG is the superior value option right now.
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Lloyds Banking Group PLC (LYG): Free Stock Analysis Report Canadian Imperial Bank of Commerce (CM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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