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

Zacks Equity Research
·2 mins read

Investors looking for stocks in the Banks - Foreign sector might want to consider either KB Financial (KB) or 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, KB Financial is sporting a Zacks Rank of #2 (Buy), while Banco Bradesco has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that KB is likely seeing its earnings outlook improve to a greater extent. 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

KB currently has a forward P/E ratio of 5.36, while BBD has a forward P/E of 10.93. We also note that KB has a PEG ratio of 1.09. 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 3.80.

Another notable valuation metric for KB is its P/B ratio of 0.39. 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 1.29.

These are just a few of the metrics contributing to KB's Value grade of A and BBD's Value grade of D.

KB 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 KB is likely the superior value option right now.


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KB Financial Group Inc (KB) : Free Stock Analysis Report
 
Banco Bradesco SA (BBD) : Free Stock Analysis Report
 
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