Investors looking for stocks in the Banks - Foreign sector might want to consider either Grupo Financiero Galicia (GGAL) or United Overseas Bank Ltd. (UOVEY). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Grupo Financiero Galicia has a Zacks Rank of #2 (Buy), while United Overseas Bank Ltd. has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GGAL is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
GGAL currently has a forward P/E ratio of 11.32, while UOVEY has a forward P/E of 12.59. We also note that GGAL has a PEG ratio of 0.24. 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. UOVEY currently has a PEG ratio of 1.42.
Another notable valuation metric for GGAL is its P/B ratio of 1.04. 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, UOVEY has a P/B of 1.37.
These are just a few of the metrics contributing to GGAL's Value grade of A and UOVEY's Value grade of D.
GGAL stands above UOVEY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GGAL is the superior value option right now.
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Grupo Financiero Galicia S.A. (GGAL): Free Stock Analysis Report
United Overseas Bank Ltd. (UOVEY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).