BSBR Vs. BAP: Which Stock Is The Better Value Option?

Investors interested in stocks from the Banks - Foreign sector have probably already heard of Banco Santander-Brazil (BSBR) and Credicorp (BAP). 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.

Currently, Banco Santander-Brazil has a Zacks Rank of #1 (Strong Buy), while Credicorp has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that BSBR likely has seen a stronger improvement to its earnings outlook than BAP has recently. 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.

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.

BSBR currently has a forward P/E ratio of 13.67, while BAP has a forward P/E of 14.11. We also note that BSBR has a PEG ratio of 0.95. 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. BAP currently has a PEG ratio of 1.13.

Another notable valuation metric for BSBR is its P/B ratio of 2.09. 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, BAP has a P/B of 2.60.

Based on these metrics and many more, BSBR holds a Value grade of B, while BAP has a Value grade of D.

BSBR has seen stronger estimate revision activity and sports more attractive valuation metrics than BAP, so it seems like value investors will conclude that BSBR is the superior option right now.