Investors looking for stocks in the Banks - Foreign sector might want to consider either Bank of Nova Scotia (BNS) or Canadian Imperial Bank (CM). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Bank of Nova Scotia and Canadian Imperial Bank are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that BNS'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 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 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.
BNS currently has a forward P/E ratio of 10.96, while CM has a forward P/E of 11.51. We also note that BNS has a PEG ratio of 1.67. 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. CM currently has a PEG ratio of 1.86.
Another notable valuation metric for BNS is its P/B ratio of 1.28. 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 1.57.
These are just a few of the metrics contributing to BNS's Value grade of B and CM's Value grade of D.
BNS has seen stronger estimate revision activity and sports more attractive valuation metrics than CM, so it seems like value investors will conclude that BNS is the superior option right now.
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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.
