Investors with an interest in Banks - Foreign stocks have likely encountered both BNP Paribas SA (BNPQY) and HDFC Bank (HDB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
BNP Paribas SA has a Zacks Rank of #2 (Buy), while HDFC Bank has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BNPQY has an improving earnings outlook. However, value investors will care about much more than just this.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
BNPQY currently has a forward P/E ratio of 9.03, while HDB has a forward P/E of 17.04. We also note that BNPQY has a PEG ratio of 0.60. 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. HDB currently has a PEG ratio of 1.29.
Another notable valuation metric for BNPQY is its P/B ratio of 0.84. 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, HDB has a P/B of 1.78.
These metrics, and several others, help BNPQY earn a Value grade of B, while HDB has been given a Value grade of D.
BNPQY is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BNPQY is likely the superior value option right now.
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BNP Paribas SA (BNPQY): Free Stock Analysis Report
HDFC Bank Limited (HDB): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).