Advertisement
Canada markets closed

  • S&P/TSX

    22,308.93
    -66.90 (-0.30%)
     

  • S&P 500

    5,222.68
    +8.60 (+0.16%)
     

  • DOW

    39,512.84
    +125.08 (+0.32%)
     

  • CAD/USD

    0.7317
    +0.0006 (+0.08%)
     

  • CRUDE OIL

    78.20
    -1.06 (-1.34%)
     

  • Bitcoin CAD

    83,273.09
    -3,000.70 (-3.48%)
     

  • CMC Crypto 200

    1,259.16
    -98.85 (-7.28%)
     

  • GOLD FUTURES

    2,366.90
    +26.60 (+1.14%)
     

  • RUSSELL 2000

    2,059.78
    -13.85 (-0.67%)
     

  • 10-Yr Bond

    4.5040
    +0.0550 (+1.24%)
     

  • NASDAQ

    16,340.87
    -5.40 (-0.03%)
     

  • VOLATILITY

    12.55
    -0.14 (-1.10%)
     

  • FTSE

    8,433.76
    +52.41 (+0.63%)
     

  • NIKKEI 225

    38,229.11
    +155.13 (+0.41%)
     

  • CAD/EUR

    0.6789
    +0.0011 (+0.16%)
     
MARKETS LIVE BLOG:

STOCKS CLIMB AS DOW POSTS 8TH STRAIGHT WIN

Fed's Michelle Bowman echoes higher-for-longer mantra for interest rates

SHG vs. BBVA: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors interested in Banks - Foreign stocks are likely familiar with Shinhan Financial (SHG) and Banco Bilbao (BBVA). 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 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.

Currently, Shinhan Financial has a Zacks Rank of #1 (Strong Buy), while Banco Bilbao has a Zacks Rank of #4 (Sell). This means that SHG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

ADVERTISEMENT

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.

SHG currently has a forward P/E ratio of 5.60, while BBVA has a forward P/E of 7.88. We also note that SHG has a PEG ratio of 0.68. 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. BBVA currently has a PEG ratio of 1.09.

Another notable valuation metric for SHG is its P/B ratio of 0.54. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BBVA has a P/B of 0.64.

These are just a few of the metrics contributing to SHG's Value grade of A and BBVA's Value grade of C.

SHG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SHG is likely the superior value 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
 
Shinhan Financial Group Co Ltd (SHG) : Free Stock Analysis Report
 
Banco Bilbao Viscaya Argentaria S.A. (BBVA) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research