Investors with an interest in Banks - Foreign stocks have likely encountered both Credit Suisse (CS) and Banco Bradesco (BBD). 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 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.
Currently, Credit Suisse has a Zacks Rank of #1 (Strong Buy), while Banco Bradesco has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that CS likely has seen a stronger improvement to its earnings outlook than BBD has recently. However, value investors will care about much more than just this.
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.
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 9.66, while BBD has a forward P/E of 10.23. We also note that CS has a PEG ratio of 0.56. 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. BBD currently has a PEG ratio of 0.59.
Another notable valuation metric for CS is its P/B ratio of 0.74. 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, BBD has a P/B of 1.88.
These are just a few of the metrics contributing to CS's Value grade of B and BBD's Value grade of D.
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
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