Investors interested in stocks from the Banks - Foreign sector have probably already heard of Deutsche Bank (DB) and Canadian Imperial Bank (CM). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Deutsche Bank has a Zacks Rank of #2 (Buy), while Canadian Imperial Bank has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DB has an improving earnings outlook. However, value investors will care about much more than just this.
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.
DB currently has a forward P/E ratio of 9.99, while CM has a forward P/E of 13.16. We also note that DB has a PEG ratio of 0.42. 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 1.70.
Another notable valuation metric for DB is its P/B ratio of 0.79. 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, CM has a P/B of 1.82.
These metrics, and several others, help DB earn a Value grade of B, while CM has been given a Value grade of C.
DB sticks out from CM in both our Zacks Rank and Style Scores models, so value investors will likely feel that DB is the better option right now.
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Deutsche Bank Aktiengesellschaft (DB): 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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