Are Investors Undervaluing China Construction Bank (CICHY) Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is China Construction Bank (CICHY). CICHY is currently sporting a Zacks Rank #2 (Buy) and an A for Value.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CICHY has a P/S ratio of 1.83. This compares to its industry's average P/S of 2.03.

If you're looking for another solid Banks - Foreign value stock, take a look at Shinhan Financial Group Co (SHG). SHG is a Zacks Rank of #1 (Strong Buy) stock with a Value score of A.

Shares of Shinhan Financial Group Co are currently trading at a forward earnings multiple of 6.31 and a PEG ratio of 0.51 compared to its industry's P/E and PEG ratios of 10.81 and 0.68, respectively.

SHG's Forward P/E has been as high as 7.09 and as low as 4.11, with a median of 5.60. During the same time period, its PEG ratio has been as high as 0.72, as low as 0.37, with a median of 0.51.

Shinhan Financial Group Co sports a P/B ratio of 0.57 as well; this compares to its industry's price-to-book ratio of 2.67. In the past 52 weeks, SHG's P/B has been as high as 0.59, as low as 0.35, with a median of 0.48.

These figures are just a handful of the metrics value investors tend to look at, but they help show that China Construction Bank and Shinhan Financial Group Co are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CICHY and SHG feels like a great value stock at the moment.

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

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