U.S. Markets open in 2 hrs 46 mins

UBS or WBK: Which Is the Better Value Stock Right Now?

Zacks Equity Research

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

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.

UBS and Westpac Banking Corporation are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that UBS is likely seeing its earnings outlook improve to a greater extent. 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.

UBS currently has a forward P/E ratio of 9.95, while WBK has a forward P/E of 12.87. We also note that UBS has a PEG ratio of 2.83. 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. WBK currently has a PEG ratio of 2.91.

Another notable valuation metric for UBS is its P/B ratio of 0.85. 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, WBK has a P/B of 1.27.

These metrics, and several others, help UBS earn a Value grade of A, while WBK has been given a Value grade of D.

UBS has seen stronger estimate revision activity and sports more attractive valuation metrics than WBK, so it seems like value investors will conclude that UBS is the superior option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
UBS Group AG (UBS) : Free Stock Analysis Report
 
Westpac Banking Corporation (WBK) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.