Investors with an interest in Banks - Foreign stocks have likely encountered both HSBC (HSBC) and United Overseas Bank Ltd. (UOVEY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, HSBC is sporting a Zacks Rank of #1 (Strong Buy), while United Overseas Bank Ltd. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that HSBC likely has seen a stronger improvement to its earnings outlook than UOVEY has recently. However, value investors will care about much more than just this.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
HSBC currently has a forward P/E ratio of 9.22, while UOVEY has a forward P/E of 10.68. We also note that HSBC has a PEG ratio of 0.47. 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. UOVEY currently has a PEG ratio of 0.73.
Another notable valuation metric for HSBC is its P/B ratio of 0.68. 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, UOVEY has a P/B of 1.06.
These are just a few of the metrics contributing to HSBC's Value grade of B and UOVEY's Value grade of C.
HSBC 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 HSBC is likely the superior value option right now.
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HSBC Holdings plc (HSBC) : Free Stock Analysis Report
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