SWDBY vs. RY: Which Stock Is the Better Value Option?
Investors with an interest in Banks - Foreign stocks have likely encountered both Swedbank AB (SWDBY) and Royal Bank (RY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Swedbank AB has a Zacks Rank of #2 (Buy), while Royal Bank has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that SWDBY likely has seen a stronger improvement to its earnings outlook than RY has recently. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
SWDBY currently has a forward P/E ratio of 8.64, while RY has a forward P/E of 11.38. We also note that SWDBY has a PEG ratio of 1.38. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. RY currently has a PEG ratio of 1.73.
Another notable valuation metric for SWDBY is its P/B ratio of 1.12. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, RY has a P/B of 1.74.
These metrics, and several others, help SWDBY earn a Value grade of B, while RY has been given a Value grade of D.
SWDBY stands above RY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SWDBY is the superior value option right now.
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Swedbank AB (SWDBY) : Free Stock Analysis Report
Royal Bank Of Canada (RY) : Free Stock Analysis Report
