BNPQY vs. ITUB: Which Stock Is the Better Value Option?

Investors with an interest in Banks - Foreign stocks have likely encountered both BNP Paribas SA (BNPQY) and Banco Itau (ITUB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.

BNP Paribas SA has a Zacks Rank of #2 (Buy), while Banco Itau has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BNPQY has an improving earnings outlook. 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.

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.

BNPQY currently has a forward P/E ratio of 7.58, while ITUB has a forward P/E of 8.89. We also note that BNPQY has a PEG ratio of 0.72. 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. ITUB currently has a PEG ratio of 1.00.

Another notable valuation metric for BNPQY is its P/B ratio of 0.75. 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, ITUB has a P/B of 1.98.

These are just a few of the metrics contributing to BNPQY's Value grade of A and ITUB's Value grade of C.

BNPQY stands above ITUB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BNPQY is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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