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BSBR vs. ITUB: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Banks - Foreign sector might want to consider either Banco Santander-Brazil (BSBR - Free Report) or Banco Itau (ITUB - Free Report) . 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.

Banco Santander-Brazil has a Zacks Rank of #2 (Buy), while Banco Itau has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BSBR has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

BSBR currently has a forward P/E ratio of 11.26, while ITUB has a forward P/E of 11.70. We also note that BSBR has a PEG ratio of 1.09. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ITUB currently has a PEG ratio of 1.11.

Another notable valuation metric for BSBR is its P/B ratio of 1.65. 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, ITUB has a P/B of 2.34.

Based on these metrics and many more, BSBR holds a Value grade of A, while ITUB has a Value grade of F.

BSBR 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 BSBR is likely the superior value option right now.


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Itau Unibanco Holding S.A. (ITUB) - free report >>

Banco Santander Brasil SA (BSBR) - free report >>

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