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MUFG vs. WBK: Which Stock Is the Better Value Option?

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Zacks Equity Research
·2 min read
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Investors with an interest in Banks - Foreign stocks have likely encountered both Mitsubishi UFJ (MUFG) and Westpac Banking Corporation (WBK). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, Mitsubishi UFJ has a Zacks Rank of #2 (Buy), while Westpac Banking Corporation has a Zacks Rank of #3 (Hold). This means that MUFG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

MUFG currently has a forward P/E ratio of 7.73, while WBK has a forward P/E of 15.69. We also note that MUFG has a PEG ratio of 6.72. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. WBK currently has a PEG ratio of 7.07.

Another notable valuation metric for MUFG is its P/B ratio of 0.34. 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, WBK has a P/B of 0.97.

Based on these metrics and many more, MUFG holds a Value grade of B, while WBK has a Value grade of C.

MUFG sticks out from WBK in both our Zacks Rank and Style Scores models, so value investors will likely feel that MUFG is the better option right now.


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Mitsubishi UFJ Financial Group, Inc. (MUFG) : Free Stock Analysis Report
 
Westpac Banking Corporation (WBK) : Free Stock Analysis Report
 
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Zacks Investment Research