Investors looking for stocks in the Banks - Foreign sector might want to consider either Banco Do Brasil SA (BDORY) or Canadian Imperial Bank (CM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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.
Right now, Banco Do Brasil SA is sporting a Zacks Rank of #1 (Strong Buy), while Canadian Imperial Bank has a Zacks Rank of #3 (Hold). This means that BDORY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.
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.
BDORY currently has a forward P/E ratio of 3.54, while CM has a forward P/E of 11.52. We also note that BDORY has a PEG ratio of 1.26. 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. CM currently has a PEG ratio of 1.67.
Another notable valuation metric for BDORY is its P/B ratio of 0.63. 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, CM has a P/B of 1.50.
These metrics, and several others, help BDORY earn a Value grade of A, while CM has been given a Value grade of C.
BDORY 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 BDORY is likely the superior value option right now.
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Banco Do Brasil SA (BDORY) : Free Stock Analysis Report
Canadian Imperial Bank of Commerce (CM) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
