Investors interested in stocks from the Banks - Foreign sector have probably already heard of Credicorp (BAP) and Nu Holdings Ltd. (NU). But which of these two stocks presents investors with the better value opportunity right now? 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.
Currently, both Credicorp and Nu Holdings Ltd. are holding a Zacks Rank of #2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.
BAP currently has a forward P/E ratio of 11.49, while NU has a forward P/E of 28.40. We also note that BAP has a PEG ratio of 0.74. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. NU currently has a PEG ratio of 0.80.
Another notable valuation metric for BAP is its P/B ratio of 3.06. 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, NU has a P/B of 7.61.
Based on these metrics and many more, BAP holds a Value grade of B, while NU has a Value grade of D.
Both BAP and NU are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BAP is the superior value option right now.
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Credicorp Ltd. (BAP): Free Stock Analysis Report Nu Holdings Ltd. (NU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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