Investors looking for stocks in the Banks - Foreign sector might want to consider either Grupo Financiero Galicia (GGAL) or Nu Holdings Ltd. (NU). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Grupo Financiero Galicia and Nu Holdings Ltd. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that GGAL likely has seen a stronger improvement to its earnings outlook than NU has recently. But this is just one factor that value investors are interested in.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GGAL currently has a forward P/E ratio of 13.73, while NU has a forward P/E of 16.39. We also note that GGAL has a PEG ratio of 0.35. 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. NU currently has a PEG ratio of 0.55.
Another notable valuation metric for GGAL is its P/B ratio of 1.37. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, NU has a P/B of 5.27.
These metrics, and several others, help GGAL earn a Value grade of B, while NU has been given a Value grade of C.
GGAL stands above NU 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
Nu Holdings Ltd. (NU): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).