Investors interested in stocks from the Banks - Foreign sector have probably already heard of Banco Macro (BMA) and Royal Bank (RY). 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.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Banco Macro and Royal Bank are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that BMA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
BMA currently has a forward P/E ratio of 5.31, while RY has a forward P/E of 11.75. We also note that BMA has a PEG ratio of 0.39. 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. RY currently has a PEG ratio of 1.96.
Another notable valuation metric for BMA is its P/B ratio of 1.60. 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, RY has a P/B of 2.06.
Based on these metrics and many more, BMA holds a Value grade of A, while RY has a Value grade of C.
BMA stands above RY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BMA is the superior value option right now.
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Macro Bank Inc. (BMA) : Free Stock Analysis Report
Royal Bank Of Canada (RY) : Free Stock Analysis Report
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