BSAC or BCH: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Banks - Foreign sector might want to consider either Banco Santander-Chile (BSAC) or Banco De Chile (BCH). 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.

Banco Santander-Chile and Banco De Chile are both sporting a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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 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.

BSAC currently has a forward P/E ratio of 12.47, while BCH has a forward P/E of 14.17. We also note that BSAC has a PEG ratio of 0.74. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BCH currently has a PEG ratio of 2.66.

Another notable valuation metric for BSAC is its P/B ratio of 3.25. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, BCH has a P/B of 3.54.

Based on these metrics and many more, BSAC holds a Value grade of B, while BCH has a Value grade of D.

Both BSAC and BCH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BSAC is the superior value option right now.

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

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