NWG or NABZY: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Banks - Foreign sector have probably already heard of NatWest Group (NWG) and National Australia Bank Ltd. (NABZY). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.
Currently, NatWest Group has a Zacks Rank of #2 (Buy), while National Australia Bank Ltd. has a Zacks Rank of #4 (Sell). This means that NWG'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 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.
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.
NWG currently has a forward P/E ratio of 6.75, while NABZY has a forward P/E of 13.61. We also note that NWG has a PEG ratio of 0.26. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NABZY currently has a PEG ratio of 1.16.
Another notable valuation metric for NWG is its P/B ratio of 0.58. 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, NABZY has a P/B of 1.44.
These are just a few of the metrics contributing to NWG's Value grade of A and NABZY's Value grade of D.
NWG has seen stronger estimate revision activity and sports more attractive valuation metrics than NABZY, so it seems like value investors will conclude that NWG is the superior option right now.
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NatWest Group plc (NWG) : Free Stock Analysis Report
National Australia Bank Ltd. (NABZY) : Free Stock Analysis Report
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