SHG or NU: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Banks - Foreign sector have probably already heard of Shinhan Financial (SHG) and Nu Holdings Ltd. (NU). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Shinhan Financial has a Zacks Rank of #2 (Buy), while Nu Holdings Ltd. has a Zacks Rank of #3 (Hold). This means that SHG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

SHG currently has a forward P/E ratio of 4.95, while NU has a forward P/E of 22.48. We also note that SHG has a PEG ratio of 0.44. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NU currently has a PEG ratio of 0.67.

Another notable valuation metric for SHG is its P/B ratio of 0.42. 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, NU has a P/B of 7.65.

These are just a few of the metrics contributing to SHG's Value grade of A and NU's Value grade of C.

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

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

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