HSNGY vs. BCH: Which Stock Is the Better Value Option?

Investors interested in stocks from the Banks - Foreign sector have probably already heard of Hang Seng Bank Ltd. (HSNGY) and Banco De Chile (BCH). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Hang Seng Bank Ltd. and Banco De Chile are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that HSNGY likely has seen a stronger improvement to its earnings outlook than BCH has recently. But this is only part of the picture for value investors.

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.

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.

HSNGY currently has a forward P/E ratio of 11.24, while BCH has a forward P/E of 12.31. We also note that HSNGY has a PEG ratio of 5.18. 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. BCH currently has a PEG ratio of 6.55.

Another notable valuation metric for HSNGY is its P/B ratio of 1.07. 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, BCH has a P/B of 2.32.

These metrics, and several others, help HSNGY earn a Value grade of B, while BCH has been given a Value grade of D.

HSNGY sticks out from BCH in both our Zacks Rank and Style Scores models, so value investors will likely feel that HSNGY is the better option right now.

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

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