Investors interested in stocks from the Banks - Foreign sector have probably already heard of Credicorp (BAP) and Banco Santander-Chile (BSAC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Credicorp has a Zacks Rank of #2 (Buy), while Banco Santander-Chile has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BAP has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
BAP currently has a forward P/E ratio of 10.85, while BSAC has a forward P/E of 12.12. We also note that BAP has a PEG ratio of 0.70. 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. BSAC currently has a PEG ratio of 0.72.
Another notable valuation metric for BAP is its P/B ratio of 2.15. 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, BSAC has a P/B of 2.88.
These are just a few of the metrics contributing to BAP's Value grade of A and BSAC's Value grade of C.
BAP 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 BAP is likely the superior value option right now.
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Credicorp Ltd. (BAP): Free Stock Analysis Report Banco Santander Chile (BSAC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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