Investors with an interest in Banks - Foreign stocks have likely encountered both HSBC (HSBC) and Nordea Bank AB (NRDBY). But which of these two stocks presents investors with the better value opportunity right now? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
HSBC has a Zacks Rank of #2 (Buy), while Nordea Bank AB has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that HSBC likely has seen a stronger improvement to its earnings outlook than NRDBY has recently. But this is only part of the picture for value investors.
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.
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.
HSBC currently has a forward P/E ratio of 9.52, while NRDBY has a forward P/E of 10.67. We also note that HSBC has a PEG ratio of 1.75. 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. NRDBY currently has a PEG ratio of 4.00.
Another notable valuation metric for HSBC is its P/B ratio of 1.16. 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, NRDBY has a P/B of 1.72.
Based on these metrics and many more, HSBC holds a Value grade of B, while NRDBY has a Value grade of D.
HSBC 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 HSBC is likely the superior value option right now.
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HSBC Holdings plc (HSBC): Free Stock Analysis Report Nordea Bank AB (NRDBY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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