BBVA vs. TD: Which Stock Is the Better Value Option?
Investors interested in stocks from the Banks - Foreign sector have probably already heard of Banco Bilbao (BBVA) and Toronto-Dominion Bank (TD). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Banco Bilbao has a Zacks Rank of #2 (Buy), while Toronto-Dominion Bank has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BBVA is likely seeing its earnings outlook improve to a greater extent. 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
BBVA currently has a forward P/E ratio of 6.16, while TD has a forward P/E of 10.51. We also note that BBVA has a PEG ratio of 1.18. 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. TD currently has a PEG ratio of 1.69.
Another notable valuation metric for BBVA is its P/B ratio of 0.96. 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, TD has a P/B of 1.49.
These metrics, and several others, help BBVA earn a Value grade of A, while TD has been given a Value grade of F.
BBVA 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 BBVA is likely the superior value option right now.
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Banco Bilbao Viscaya Argentaria S.A. (BBVA) : Free Stock Analysis Report
Toronto Dominion Bank (The) (TD) : Free Stock Analysis Report
