BBL vs. BHP: Which Stock Is the Better Value Option?
Investors with an interest in Mining - Miscellaneous stocks have likely encountered both Billiton (BBL) and BHP (BHP). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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.
Both Billiton and BHP have a Zacks Rank of # 1 (Strong Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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 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.
BBL currently has a forward P/E ratio of 11.27, while BHP has a forward P/E of 13.31. We also note that BBL has a PEG ratio of 2.72. 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. BHP currently has a PEG ratio of 3.21.
Another notable valuation metric for BBL is its P/B ratio of 1.17. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, BHP has a P/B of 2.18.
These metrics, and several others, help BBL earn a Value grade of A, while BHP has been given a Value grade of D.
Both BBL and BHP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BBL is the superior value option right now.
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BHP Billiton PLC (BBL) : Free Stock Analysis Report
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