BBVA vs. DBSDY: Which Stock Is the Better Value Option?

Investors looking for stocks in the Banks - Foreign sector might want to consider either Banco Bilbao (BBVA) or DBS Group Holdings Ltd (DBSDY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Banco Bilbao has a Zacks Rank of #2 (Buy), while DBS Group Holdings Ltd has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BBVA likely has seen a stronger improvement to its earnings outlook than DBSDY has recently. However, value investors will care about much more than just this.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

BBVA currently has a forward P/E ratio of 8.25, while DBSDY has a forward P/E of 11.77. We also note that BBVA has a PEG ratio of 1.55. 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. DBSDY currently has a PEG ratio of 7.49.

Another notable valuation metric for BBVA is its P/B ratio of 1.40. 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, DBSDY has a P/B of 1.93.

These metrics, and several others, help BBVA earn a Value grade of B, while DBSDY has been given a Value grade of D.

BBVA 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 BBVA is likely the superior value option right now.

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

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