ITUB or HDB: Which Is the Better Value Stock Right Now?
Investors with an interest in Banks - Foreign stocks have likely encountered both Banco Itau (ITUB) and HDFC Bank (HDB). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Banco Itau and HDFC Bank are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This means that ITUB's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
ITUB currently has a forward P/E ratio of 7.73, while HDB has a forward P/E of 22.29. We also note that ITUB has a PEG ratio of 0.67. 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. HDB currently has a PEG ratio of 1.45.
Another notable valuation metric for ITUB is its P/B ratio of 1.45. 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, HDB has a P/B of 3.19.
These are just a few of the metrics contributing to ITUB's Value grade of B and HDB's Value grade of D.
ITUB stands above HDB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ITUB is the superior value option right now.
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Itau Unibanco Holding S.A. (ITUB) : Free Stock Analysis Report
HDFC Bank Limited (HDB) : Free Stock Analysis Report
