Investors interested in Banks - Foreign stocks are likely familiar with Sumitomo Mitsui (SMFG) and Banco Bilbao (BBVA (MC:BBVA)). 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, Sumitomo Mitsui has a Zacks Rank of #2 (Buy), while Banco Bilbao has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SMFG is likely seeing its earnings outlook improve to a greater extent. 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.
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.
SMFG currently has a forward P/E ratio of 7.35, while BBVA has a forward P/E of 7.61. We also note that SMFG has a PEG ratio of 2.74. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BBVA currently has a PEG ratio of 3.26.
Another notable valuation metric for SMFG is its P/B ratio of 0.48. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, BBVA has a P/B of 0.59.
These metrics, and several others, help SMFG earn a Value grade of B, while BBVA has been given a Value grade of F.
SMFG has seen stronger estimate revision activity and sports more attractive valuation metrics than BBVA, so it seems like value investors will conclude that SMFG is the superior option right now.
Sumitomo Mitsui Financial Group Inc (SMFG): Free Stock Analysis Report
Banco Bilbao Viscaya Argentaria S.A. (BBVA): Free Stock Analysis Report
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