Advertisement
Singapore markets closed
  • Straits Times Index

    3,135.76
    -6.09 (-0.19%)
     
  • Nikkei

    39,910.82
    +744.63 (+1.90%)
     
  • Hang Seng

    16,589.44
    +78.00 (+0.47%)
     
  • FTSE 100

    7,682.50
    +52.48 (+0.69%)
     
  • Bitcoin USD

    61,526.24
    -576.47 (-0.93%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,117.71
    +21.44 (+0.42%)
     
  • Dow

    39,037.79
    +41.40 (+0.11%)
     
  • Nasdaq

    16,194.17
    +102.25 (+0.64%)
     
  • Gold

    2,089.80
    +35.10 (+1.71%)
     
  • Crude Oil

    80.77
    +2.51 (+3.21%)
     
  • 10-Yr Bond

    4.2130
    -0.0390 (-0.92%)
     
  • FTSE Bursa Malaysia

    1,538.02
    -13.42 (-0.86%)
     
  • Jakarta Composite Index

    7,311.91
    -4.20 (-0.06%)
     
  • PSE Index

    6,919.59
    -25.12 (-0.36%)
     

ITUB or HDB: Which Is the Better Value Stock Right Now?

Investors interested in Banks - Foreign stocks are likely familiar with Banco Itau (ITUB) and HDFC Bank (HDB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Banco Itau has a Zacks Rank of #2 (Buy), while HDFC Bank has a Zacks Rank of #3 (Hold). This means that ITUB'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 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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

ITUB currently has a forward P/E ratio of 8.63, while HDB has a forward P/E of 21.12. We also note that ITUB has a PEG ratio of 0.75. 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. HDB currently has a PEG ratio of 1.46.

Another notable valuation metric for ITUB is its P/B ratio of 1.62. 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, HDB has a P/B of 2.09.

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

ITUB 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 ITUB 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

Itau Unibanco Holding S.A. (ITUB) : Free Stock Analysis Report

HDFC Bank Limited (HDB) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research