Investors interested in stocks from the Banks - Foreign sector have probably already heard of Deutsche Bank (DB) and National Australia Bank Ltd. (NABZY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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.
Deutsche Bank and National Australia Bank Ltd. are both sporting 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 just one factor that value investors are interested in.
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.
DB currently has a forward P/E ratio of 10.67, while NABZY has a forward P/E of 17.67. We also note that DB has a PEG ratio of 0.41. 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. NABZY currently has a PEG ratio of 6.20.
Another notable valuation metric for DB is its P/B ratio of 0.81. 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 2.09.
Based on these metrics and many more, DB holds a Value grade of B, while NABZY has a Value grade of C.
Both DB and NABZY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DB is the superior value 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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