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BMA vs. RY: Which Stock Should Value Investors Buy Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Investors with an interest in Banks - Foreign stocks have likely encountered both Banco Macro (BMA) and Royal Bank (RY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Right now, Banco Macro is sporting a Zacks Rank of #2 (Buy), while Royal Bank has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BMA has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

BMA currently has a forward P/E ratio of 6.73, while RY has a forward P/E of 10.29. We also note that BMA has a PEG ratio of 0.49. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. RY currently has a PEG ratio of 1.41.

Another notable valuation metric for BMA is its P/B ratio of 1.55. 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, RY has a P/B of 1.76.

These are just a few of the metrics contributing to BMA's Value grade of A and RY's Value grade of F.

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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