Investors with an interest in Banks - Foreign stocks have likely encountered both Toronto-Dominion Bank (TD) and ICICI Bank Limited (IBN). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Toronto-Dominion Bank and ICICI Bank Limited are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that TD likely has seen a stronger improvement to its earnings outlook than IBN has recently. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
TD currently has a forward P/E ratio of 14.69, while IBN has a forward P/E of 19.19. We also note that TD has a PEG ratio of 1.31. 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. IBN currently has a PEG ratio of 1.42.
Another notable valuation metric for TD is its P/B ratio of 1.92. 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, IBN has a P/B of 2.71.
Based on these metrics and many more, TD holds a Value grade of B, while IBN has a Value grade of C.
TD is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that TD is likely the superior value option right now.
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Toronto Dominion Bank (The) (TD): 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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