BMA vs. NABZY: Which Stock Is the Better Value Option?

Investors interested in stocks from the Banks - Foreign sector have probably already heard of Banco Macro (BMA) and National Australia Bank Ltd. (NABZY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Right now, Banco Macro is sporting a Zacks Rank of #1 (Strong Buy), while National Australia Bank Ltd. has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that BMA likely has seen a stronger improvement to its earnings outlook than NABZY has recently. 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.

BMA currently has a forward P/E ratio of 18.28, while NABZY has a forward P/E of 19.05. We also note that BMA has a PEG ratio of 0.61. 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 5.31.

Another notable valuation metric for BMA is its P/B ratio of 1.48. 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, NABZY has a P/B of 2.06.

Based on these metrics and many more, BMA holds a Value grade of A, while NABZY has a Value grade of F.

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

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

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