Investors with an interest in Banks - Foreign stocks have likely encountered both Mizuho (MFG) and Banco Macro (BMA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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, Mizuho has a Zacks Rank of #2 (Buy), while Banco Macro has a Zacks Rank of #5 (Strong Sell). This means that MFG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
MFG currently has a forward P/E ratio of 10.94, while BMA has a forward P/E of 16.81. We also note that MFG has a PEG ratio of 0.79. 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. BMA currently has a PEG ratio of 1.47.
Another notable valuation metric for MFG is its P/B ratio of 1.11. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, BMA has a P/B of 1.24.
These metrics, and several others, help MFG earn a Value grade of B, while BMA has been given a Value grade of C.
MFG has seen stronger estimate revision activity and sports more attractive valuation metrics than BMA, so it seems like value investors will conclude that MFG is the superior option right now.
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Mizuho Financial Group, Inc. (MFG): Free Stock Analysis Report Macro Bank Inc. (BMA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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