Investors looking for stocks in the Banks - Foreign sector might want to consider either Woori Bank (WF) or HDFC Bank (HDB). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Woori Bank is sporting a Zacks Rank of #2 (Buy), while HDFC Bank has a Zacks Rank of #3 (Hold). This means that WF's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
WF currently has a forward P/E ratio of 8.11, while HDB has a forward P/E of 16.76. We also note that WF has a PEG ratio of 0.69. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HDB currently has a PEG ratio of 1.34.
Another notable valuation metric for WF is its P/B ratio of 0.66. 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, HDB has a P/B of 1.75.
These are just a few of the metrics contributing to WF's Value grade of B and HDB's Value grade of F.
WF stands above HDB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that WF is the superior value option right now.
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Woori Bank (WF): Free Stock Analysis Report
HDFC Bank Limited (HDB): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).