Investors with an interest in Banks - Foreign stocks have likely encountered both Nordea Bank AB (NRDBY) and DNB Bank ASA (DNBBY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Nordea Bank AB has a Zacks Rank of #2 (Buy), while DNB Bank ASA has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NRDBY is likely seeing its earnings outlook improve to a greater extent. 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.
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.
NRDBY currently has a forward P/E ratio of 7.80, while DNBBY has a forward P/E of 8.45. We also note that NRDBY has a PEG ratio of 0.75. 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. DNBBY currently has a PEG ratio of 1.55.
Another notable valuation metric for NRDBY is its P/B ratio of 1.23. 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, DNBBY has a P/B of 1.26.
These metrics, and several others, help NRDBY earn a Value grade of B, while DNBBY has been given a Value grade of C.
NRDBY sticks out from DNBBY in both our Zacks Rank and Style Scores models, so value investors will likely feel that NRDBY is the better option right now.
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