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BSMX vs. CM: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Banks - Foreign sector might want to consider either Santander Mexico (BSMX - Free Report) or Canadian Imperial Bank (CM - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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.

Santander Mexico and Canadian Imperial Bank are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BSMX has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

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.

BSMX currently has a forward P/E ratio of 7.10, while CM has a forward P/E of 9.95. We also note that BSMX has a PEG ratio of 0.71. 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. CM currently has a PEG ratio of 2.82.

Another notable valuation metric for BSMX is its P/B ratio of 0.90. 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, CM has a P/B of 1.42.

These metrics, and several others, help BSMX earn a Value grade of B, while CM has been given a Value grade of D.

BSMX 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 BSMX is likely the superior value option right now.


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Canadian Imperial Bank of Commerce (CM) - free report >>

Grupo Financiero Santander Mexico S.A. B. de C.V. (BSMX) - free report >>

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