U.S. Markets close in 4 hrs 48 mins

GGAL vs. BBD: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
Atlantic Capital Bancshares (ACBI) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Investors looking for stocks in the Banks - Foreign sector might want to consider either Grupo Financiero Galicia (GGAL) or Banco Bradesco (BBD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Grupo Financiero Galicia has a Zacks Rank of #2 (Buy), while Banco Bradesco has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GGAL has an improving earnings outlook. 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.

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.

GGAL currently has a forward P/E ratio of 7.25, while BBD has a forward P/E of 11.75. We also note that GGAL has a PEG ratio of 0.45. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BBD currently has a PEG ratio of 0.53.

Another notable valuation metric for GGAL is its P/B ratio of 2.08. 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, BBD has a P/B of 2.18.

These metrics, and several others, help GGAL earn a Value grade of B, while BBD has been given a Value grade of D.

GGAL stands above BBD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GGAL is the superior value option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Grupo Financiero Galicia S.A. (GGAL) : Free Stock Analysis Report
 
Banco Bradesco SA (BBD) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research