Investors looking for stocks in the Banks - Foreign sector might want to consider either Mizuho (MFG) or National Australia Bank Ltd. (NABZY). 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.
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.
Both Mizuho and National Australia Bank Ltd. have a Zacks Rank of # 2 (Buy) right now. 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 tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
MFG currently has a forward P/E ratio of 10.28, while NABZY has a forward P/E of 16.43. We also note that MFG has a PEG ratio of 0.65. 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. NABZY currently has a PEG ratio of 12.26.
Another notable valuation metric for MFG is its P/B ratio of 0.93. 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, NABZY has a P/B of 1.83.
Based on these metrics and many more, MFG holds a Value grade of B, while NABZY has a Value grade of D.
Both MFG and NABZY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MFG is the superior value option right now.
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Mizuho Financial Group, Inc. (MFG): Free Stock Analysis Report National Australia Bank Ltd. (NABZY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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