Investors with an interest in Banks - Foreign stocks have likely encountered both Shinhan Financial (SHG) and Canadian Imperial Bank (CM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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 Shinhan Financial and Canadian Imperial Bank are holding a Zacks Rank of #2 (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 piece of the puzzle for value investors.
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.
SHG currently has a forward P/E ratio of 9.03, while CM has a forward P/E of 14.22. We also note that SHG has a PEG ratio of 0.58. 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. CM currently has a PEG ratio of 1.29.
Another notable valuation metric for SHG is its P/B ratio of 0.82. 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, CM has a P/B of 2.23.
Based on these metrics and many more, SHG holds a Value grade of A, while CM has a Value grade of F.
Both SHG and CM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SHG is the superior value option right now.
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Shinhan Financial Group Co Ltd (SHG): Free Stock Analysis Report Canadian Imperial Bank of Commerce (CM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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