Investors interested in stocks from the Banks - Foreign sector have probably already heard of Barclays (BCS) and Nordea Bank AB (NRDBY). But which of these two stocks presents investors with the better value opportunity right now? Let's 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, Barclays is sporting a Zacks Rank of #2 (Buy), while Nordea Bank AB has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BCS likely has seen a stronger improvement to its earnings outlook than NRDBY has recently. But this is just one piece of the puzzle for value investors.
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.
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.
BCS currently has a forward P/E ratio of 7.58, while NRDBY has a forward P/E of 9.48. We also note that BCS has a PEG ratio of 0.42. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NRDBY currently has a PEG ratio of 5.68.
Another notable valuation metric for BCS is its P/B ratio of 0.63. 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, NRDBY has a P/B of 1.54.
These metrics, and several others, help BCS earn a Value grade of B, while NRDBY has been given a Value grade of F.
BCS has seen stronger estimate revision activity and sports more attractive valuation metrics than NRDBY, so it seems like value investors will conclude that BCS is the superior option right now.
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Barclays PLC (BCS): Free Stock Analysis Report Nordea Bank AB (NRDBY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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