Yahoo Finance HSBC or NABZY: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Banks - Foreign sector have probably already heard of HSBC (HSBC) and National Australia Bank Ltd. (NABZY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, HSBC is sporting a Zacks Rank of #1 (Strong Buy), while National Australia Bank Ltd. has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that HSBC likely has seen a stronger improvement to its earnings outlook than NABZY has recently. However, value investors will care about much more than just this.
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.
HSBC currently has a forward P/E ratio of 8.03, while NABZY has a forward P/E of 12.86. We also note that HSBC has a PEG ratio of 0.41. 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. NABZY currently has a PEG ratio of 1.10.
Another notable valuation metric for HSBC is its P/B ratio of 0.58. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, NABZY has a P/B of 1.33.
These metrics, and several others, help HSBC earn a Value grade of B, while NABZY has been given a Value grade of D.
HSBC stands above NABZY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HSBC is the superior value option right now.
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