Investors with an interest in Banks - Foreign stocks have likely encountered both Canadian Imperial Bank (CM) and ICICI Bank Limited (IBN). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Canadian Imperial Bank is sporting a Zacks Rank of #2 (Buy), while ICICI Bank Limited has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that CM likely has seen a stronger improvement to its earnings outlook than IBN has recently. But this is just one factor that value investors are interested in.
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 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.
CM currently has a forward P/E ratio of 12.83, while IBN has a forward P/E of 19.62. We also note that CM has a PEG ratio of 1.36. 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. IBN currently has a PEG ratio of 1.46.
Another notable valuation metric for CM is its P/B ratio of 1.91. 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, IBN has a P/B of 2.75.
These metrics, and several others, help CM earn a Value grade of B, while IBN has been given a Value grade of C.
CM has seen stronger estimate revision activity and sports more attractive valuation metrics than IBN, so it seems like value investors will conclude that CM is the superior option right now.
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Canadian Imperial Bank of Commerce (CM): Free Stock Analysis Report ICICI Bank Limited (IBN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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