BSBR vs. UOVEY: Which Stock Should Value Investors Buy Now?

Investors looking for stocks in the Banks - Foreign sector might want to consider either Banco Santander-Brazil (BSBR) 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Currently, Banco Santander-Brazil has a Zacks Rank of #2 (Buy), while United Overseas Bank Ltd. has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that BSBR likely has seen a stronger improvement to its earnings outlook than UOVEY has recently. But this is only part of the picture for value investors.

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.

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.

BSBR currently has a forward P/E ratio of 6.88, while UOVEY has a forward P/E of 11.21. We also note that BSBR has a PEG ratio of 0.67. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. UOVEY currently has a PEG ratio of 0.93.

Another notable valuation metric for BSBR is its P/B ratio of 1.01. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, UOVEY has a P/B of 1.21.

These metrics, and several others, help BSBR earn a Value grade of B, while UOVEY has been given a Value grade of C.

BSBR stands above UOVEY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BSBR 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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