CM vs. DBSDY: Which Stock Is the Better Value Option?

Investors interested in Banks - Foreign stocks are likely familiar with Canadian Imperial Bank (CM) and DBS Group Holdings Ltd (DBSDY). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 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.

Canadian Imperial Bank has a Zacks Rank of #2 (Buy), while DBS Group Holdings Ltd has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that CM likely has seen a stronger improvement to its earnings outlook than DBSDY has recently. But this is just one factor that value investors are interested in.

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.

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.

CM currently has a forward P/E ratio of 13.11, while DBSDY has a forward P/E of 13.16. We also note that CM has a PEG ratio of 1.70. 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. DBSDY currently has a PEG ratio of 4.43.

Another notable valuation metric for CM is its P/B ratio of 1.82. 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, DBSDY has a P/B of 2.13.

These metrics, and several others, help CM earn a Value grade of B, while DBSDY has been given a Value grade of D.

CM has seen stronger estimate revision activity and sports more attractive valuation metrics than DBSDY, so it seems like value investors will conclude that CM is the superior option right now.

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

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