ITUB vs. HDB: Which Stock Is the Better Value Option?
Investors interested in stocks from the Banks - Foreign sector have probably already heard of 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.
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.
Banco Itau has a Zacks Rank of #2 (Buy), while HDFC Bank has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ITUB has an improving earnings outlook. But this is only part of the picture 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 7.71, while HDB has a forward P/E of 22.87. We also note that ITUB has a PEG ratio of 0.67. 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. HDB currently has a PEG ratio of 1.48.
Another notable valuation metric for ITUB is its P/B ratio of 1.45. 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, HDB has a P/B of 3.26.
These are just a few of the metrics contributing to ITUB's Value grade of B and HDB's Value grade of C.
ITUB sticks out from HDB in both our Zacks Rank and Style Scores models, so value investors will likely feel that ITUB is the better 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
