Back to top

Image: Bigstock

BBL vs. BHP: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors with an interest in Mining - Miscellaneous stocks have likely encountered both Billiton (BBL - Free Report) and BHP (BHP - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, both Billiton and BHP are holding a Zacks Rank of # 1 (Strong Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.

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.

BBL currently has a forward P/E ratio of 10.35, while BHP has a forward P/E of 12.62. We also note that BBL has a PEG ratio of 2.50. 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. BHP currently has a PEG ratio of 3.04.

Another notable valuation metric for BBL is its P/B ratio of 0.86. 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, BHP has a P/B of 1.59.

These metrics, and several others, help BBL earn a Value grade of A, while BHP has been given a Value grade of D.

Both BBL and BHP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BBL is the superior value option right now.


In-Depth Zacks Research for the Tickers Above


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


BHP Billiton PLC (BBL) - free report >>

BHP Group Limited Sponsored ADR (BHP) - free report >>

Published in