Investors with an interest in Banks - Foreign stocks have likely encountered both HSBC (HSBC) and Banco Santander-Chile (BSAC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, HSBC is sporting a Zacks Rank of #2 (Buy), while Banco Santander-Chile has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HSBC has an improving earnings outlook. 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 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.
HSBC currently has a forward P/E ratio of 11.53, while BSAC has a forward P/E of 12.84. We also note that HSBC has a PEG ratio of 0.97. 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. BSAC currently has a PEG ratio of 1.08.
Another notable valuation metric for HSBC is its P/B ratio of 1.5. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, BSAC has a P/B of 3.3.
These are just a few of the metrics contributing to HSBC's Value grade of B and BSAC's Value grade of C.
HSBC is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that HSBC is likely the superior value option right now.
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HSBC Holdings plc (HSBC): Free Stock Analysis Report Banco Santander Chile (BSAC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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