Investors interested in Banks - Foreign stocks are likely familiar with Bancolombia (CIB) and Royal Bank (RY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Bancolombia is sporting a Zacks Rank of #2 (Buy), while Royal Bank has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that CIB likely has seen a stronger improvement to its earnings outlook than RY has recently. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
CIB currently has a forward P/E ratio of 11.08, while RY has a forward P/E of 11.54. We also note that CIB has a PEG ratio of 0.86. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. RY currently has a PEG ratio of 1.93.
Another notable valuation metric for CIB is its P/B ratio of 1.47. 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 2.03.
These metrics, and several others, help CIB earn a Value grade of A, while RY has been given a Value grade of C.
CIB has seen stronger estimate revision activity and sports more attractive valuation metrics than RY, so it seems like value investors will conclude that CIB is the superior option right now.
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BanColombia S.A. (CIB) : Free Stock Analysis Report
Royal Bank Of Canada (RY) : Free Stock Analysis Report
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