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Investors interested in Banks - Foreign stocks are likely familiar with Bank of Montreal (BMO) and Hang Seng Bank Ltd. (HSNGY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Bank of Montreal and Hang Seng Bank Ltd. are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BMO has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
BMO currently has a forward P/E ratio of 10.95, while HSNGY has a forward P/E of 17.13. We also note that BMO has a PEG ratio of 0.75. 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. HSNGY currently has a PEG ratio of 1.92.
Another notable valuation metric for BMO is its P/B ratio of 1.49. 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, HSNGY has a P/B of 1.57.
These metrics, and several others, help BMO earn a Value grade of B, while HSNGY has been given a Value grade of D.
BMO 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 BMO is likely the superior value option right now.
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Hang Seng Bank Ltd. (HSNGY) : Free Stock Analysis Report
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