Back to top

Image: Bigstock

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

Read MoreHide Full Article

Investors interested in Banks - Foreign stocks are likely familiar with Santander Mexico (BSMX - Free Report) and Credicorp (BAP - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Santander Mexico has a Zacks Rank of #2 (Buy), while Credicorp has a Zacks Rank of #5 (Strong Sell) right now. This means that BSMX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.

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.

BSMX currently has a forward P/E ratio of 8.87, while BAP has a forward P/E of 104.74. We also note that BSMX has a PEG ratio of 7.21. 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. BAP currently has a PEG ratio of 42.40.

Another notable valuation metric for BSMX is its P/B ratio of 1.08. 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, BAP has a P/B of 1.88.

These are just a few of the metrics contributing to BSMX's Value grade of A and BAP's Value grade of C.

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.

In-Depth Zacks Research for the Tickers Above

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

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

Credicorp Ltd. (BAP) - free report >>

Published in