Investors interested in stocks from the Banks - Foreign sector have probably already heard of Credit Suisse (CS) and Banco Bradesco (BBD). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 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.
Credit Suisse and Banco Bradesco are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that CS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 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.
CS currently has a forward P/E ratio of 8.93, while BBD has a forward P/E of 11.34. We also note that CS has a PEG ratio of 0.46. 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. BBD currently has a PEG ratio of 0.51.
Another notable valuation metric for CS is its P/B ratio of 0.68. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, BBD has a P/B of 2.50.
These are just a few of the metrics contributing to CS's Value grade of A and BBD's Value grade of F.
CS 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 CS is likely the superior value option right now.
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Credit Suisse Group (CS) : Free Stock Analysis Report
Banco Bradesco SA (BBD) : Free Stock Analysis Report
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