Investors interested in stocks from the Banks - Foreign sector have probably already heard of Shinhan Financial (SHG) and ING Groep (ING). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Shinhan Financial has a Zacks Rank of #1 (Strong Buy), while ING Groep has a Zacks Rank of #3 (Hold) right now. This means that SHG'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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
SHG currently has a forward P/E ratio of 5.17, while ING has a forward P/E of 12.17. We also note that SHG has a PEG ratio of 2.13. 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. ING currently has a PEG ratio of 2.60.
Another notable valuation metric for SHG is its P/B ratio of 0.43. 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, ING has a P/B of 0.60.
These metrics, and several others, help SHG earn a Value grade of A, while ING has been given a Value grade of F.
SHG stands above ING thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SHG is the superior value option right now.
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Shinhan Financial Group Co Ltd (SHG) : Free Stock Analysis Report
ING Group, N.V. (ING) : Free Stock Analysis Report
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