Investors interested in Banks - Foreign stocks are likely familiar with Barclays (BCS) and Banco Itau (ITUB). But which of these two companies is the best option for those looking for undervalued stocks? 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 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, Barclays is sporting a Zacks Rank of #1 (Strong Buy), while Banco Itau has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that BCS likely has seen a stronger improvement to its earnings outlook than ITUB has recently. But this is just one factor that value investors are interested in.
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 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.
BCS currently has a forward P/E ratio of 9.17, while ITUB has a forward P/E of 9.50. We also note that BCS has a PEG ratio of 0.44. 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. ITUB currently has a PEG ratio of 1.07.
Another notable valuation metric for BCS is its P/B ratio of 0.71. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ITUB has a P/B of 2.01.
Based on these metrics and many more, BCS holds a Value grade of B, while ITUB has a Value grade of D.
BCS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BCS is likely the superior value option right now.
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Barclays PLC (BCS): Free Stock Analysis Report Itau Unibanco Holding S.A. (ITUB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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