Investors interested in stocks from the Banks - Foreign sector have probably already heard of BNP Paribas SA (BNPQY) and Banco Itau (ITUB). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both BNP Paribas SA and Banco Itau are holding a Zacks Rank of #1 (Strong Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
BNPQY currently has a forward P/E ratio of 7.81, while ITUB has a forward P/E of 10.59. We also note that BNPQY has a PEG ratio of 0.77. 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. ITUB currently has a PEG ratio of 1.06.
Another notable valuation metric for BNPQY is its P/B ratio of 0.79. 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, ITUB has a P/B of 2.38.
Based on these metrics and many more, BNPQY holds a Value grade of A, while ITUB has a Value grade of D.
Both BNPQY and ITUB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BNPQY is the superior value option right now.
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BNP Paribas SA (BNPQY): Free Stock Analysis Report Itau Unibanco Holding S.A. (ITUB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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