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DB vs. HDB: Which Stock Is the Better Value Option?

Zacks Equity Research
·2 min read

Investors interested in stocks from the Banks - Foreign sector have probably already heard of Deutsche Bank (DB) and HDFC Bank (HDB). 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 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.

Both Deutsche Bank and HDFC Bank have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

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Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

DB currently has a forward P/E ratio of 4.71, while HDB has a forward P/E of 19.61. We also note that DB has a PEG ratio of 0.53. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HDB currently has a PEG ratio of 0.91.

Another notable valuation metric for DB is its P/B ratio of 0.23. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HDB has a P/B of 3.19.

These are just a few of the metrics contributing to DB's Value grade of A and HDB's Value grade of D.

Both DB and HDB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DB is the superior value option right now.


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Deutsche Bank Aktiengesellschaft (DB) : Free Stock Analysis Report
 
HDFC Bank Limited (HDB) : Free Stock Analysis Report
 
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Zacks Investment Research