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GGAL vs. HDB: Which Stock Is the Better Value Option?

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Investors with an interest in Banks - Foreign stocks have likely encountered both Grupo Financiero Galicia (GGAL - Free Report) and HDFC Bank (HDB - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Grupo Financiero Galicia is sporting a Zacks Rank of #2 (Buy), while HDFC Bank has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that GGAL likely has seen a stronger improvement to its earnings outlook than HDB has recently. But this is just one factor that value investors are interested in.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

GGAL currently has a forward P/E ratio of 9.50, while HDB has a forward P/E of 31.28. We also note that GGAL has a PEG ratio of 0.59. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. HDB currently has a PEG ratio of 1.24.

Another notable valuation metric for GGAL is its P/B ratio of 3. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, HDB has a P/B of 6.24.

These metrics, and several others, help GGAL earn a Value grade of A, while HDB has been given a Value grade of F.

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


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HDFC Bank Limited (HDB) - free report >>

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