Investors looking for stocks in the Banks - Foreign sector might want to consider either Deutsche Bank (DB) or National Australia Bank Ltd. (NABZY). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Deutsche Bank has a Zacks Rank of #1 (Strong Buy), while National Australia Bank Ltd. has a Zacks Rank of #2 (Buy). This means that DB's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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 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.
DB currently has a forward P/E ratio of 9.95, while NABZY has a forward P/E of 17.13. We also note that DB has a PEG ratio of 0.38. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NABZY currently has a PEG ratio of 6.01.
Another notable valuation metric for DB is its P/B ratio of 0.76. 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, NABZY has a P/B of 2.07.
These metrics, and several others, help DB earn a Value grade of B, while NABZY has been given a Value grade of D.
DB has seen stronger estimate revision activity and sports more attractive valuation metrics than NABZY, so it seems like value investors will conclude that DB is the superior option right now.
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Deutsche Bank Aktiengesellschaft (DB): Free Stock Analysis Report National Australia Bank Ltd. (NABZY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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