Investors interested in stocks from the Banks - Foreign sector have probably already heard of HSBC (HSBC) and Nordea Bank AB (NRDBY). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Both HSBC and Nordea Bank AB have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture 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.
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.
HSBC currently has a forward P/E ratio of 7.33, while NRDBY has a forward P/E of 8.74. We also note that HSBC has a PEG ratio of 0.96. 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. NRDBY currently has a PEG ratio of 5.23.
Another notable valuation metric for HSBC is its P/B ratio of 0.93. 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, NRDBY has a P/B of 1.23.
These are just a few of the metrics contributing to HSBC's Value grade of B and NRDBY's Value grade of D.
Both HSBC and NRDBY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HSBC is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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).
Zacks Investment Research
