BBD or UOVEY: Which Is the Better Value Stock Right Now?

Investors with an interest in Banks - Foreign stocks have likely encountered both Banco Bradesco (BBD) and United Overseas Bank Ltd. (UOVEY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Banco Bradesco has a Zacks Rank of #2 (Buy), while United Overseas Bank Ltd. has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that BBD 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 are also interested in a number of tried-and-true valuation metrics that help show when 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.

BBD currently has a forward P/E ratio of 6.94, while UOVEY has a forward P/E of 11.19. We also note that BBD has a PEG ratio of 0.43. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. UOVEY currently has a PEG ratio of 0.90.

Another notable valuation metric for BBD is its P/B ratio of 1.07. 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, UOVEY has a P/B of 1.25.

Based on these metrics and many more, BBD holds a Value grade of A, while UOVEY has a Value grade of C.

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