Back to top

Image: Bigstock

EBKDY vs. WBK: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors looking for stocks in the Banks - Foreign sector might want to consider either Erste Group Bank AG (EBKDY - Free Report) or Westpac Banking Corporation . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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, Erste Group Bank AG has a Zacks Rank of #2 (Buy), while Westpac Banking Corporation has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that EBKDY likely has seen a stronger improvement to its earnings outlook than WBK has recently. But this is just one piece of the puzzle for value investors.

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.

EBKDY currently has a forward P/E ratio of 9.32, while WBK has a forward P/E of 11.13. We also note that EBKDY has a PEG ratio of 0.40. 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. WBK currently has a PEG ratio of 1.14.

Another notable valuation metric for EBKDY is its P/B ratio of 0.67. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, WBK has a P/B of 0.97.

Based on these metrics and many more, EBKDY holds a Value grade of B, while WBK has a Value grade of C.

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


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Erste Group Bank AG (EBKDY) - free report >>

Published in