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Investors interested in stocks from the Banks - Foreign sector have probably already heard of Bank of Montreal (BMO) and Banco De Chile (BCH). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, both Bank of Montreal and Banco De Chile are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
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 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.
BMO currently has a forward P/E ratio of 10.43, while BCH has a forward P/E of 11.45. We also note that BMO has a PEG ratio of 0.68. 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. BCH currently has a PEG ratio of 2.05.
Another notable valuation metric for BMO is its P/B ratio of 1.66. 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, BCH has a P/B of 1.77.
These metrics, and several others, help BMO earn a Value grade of B, while BCH has been given a Value grade of F.
Both BMO and BCH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BMO is the superior value option right now.
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Bank Of Montreal (BMO) : Free Stock Analysis Report
Banco De Chile (BCH) : Free Stock Analysis Report
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