Investors interested in stocks from the Banks - Foreign sector have probably already heard of Banco Bilbao (BBVA) and Toronto-Dominion Bank (TD). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Banco Bilbao and Toronto-Dominion Bank are both sporting a Zacks Rank of #1 (Strong Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture 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 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.
BBVA currently has a forward P/E ratio of 10.09, while TD has a forward P/E of 14.72. We also note that BBVA has a PEG ratio of 0.59. 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. TD currently has a PEG ratio of 1.32.
Another notable valuation metric for BBVA is its P/B ratio of 1.95. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, TD has a P/B of 2.01.
Based on these metrics and many more, BBVA holds a Value grade of B, while TD has a Value grade of C.
Both BBVA and TD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BBVA is the superior value option right now.
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Banco Bilbao Viscaya Argentaria S.A. (BBVA): Free Stock Analysis Report Toronto Dominion Bank (The) (TD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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