Investors interested in Banks - Foreign stocks are likely familiar with Bank of Nova Scotia (BNS) and Westpac Banking Corporation (WBK). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.
Bank of Nova Scotia and Westpac Banking Corporation are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
BNS currently has a forward P/E ratio of 9.63, while WBK has a forward P/E of 12.91. We also note that BNS has a PEG ratio of 2.68. 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. WBK currently has a PEG ratio of 8.61.
Another notable valuation metric for BNS is its P/B ratio of 1.25. 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, WBK has a P/B of 1.43.
These are just a few of the metrics contributing to BNS's Value grade of B and WBK's Value grade of C.
Both BNS and WBK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BNS is the superior value option right now.
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Bank of Nova Scotia (The) (BNS) : Free Stock Analysis Report
Westpac Banking Corporation (WBK) : Free Stock Analysis Report
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