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BNS vs. HDB: 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 Bank of Nova Scotia (BNS - Free Report) or HDFC Bank (HDB - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Bank of Nova Scotia has a Zacks Rank of #2 (Buy), while HDFC Bank has a Zacks Rank of #3 (Hold) right now. This means that BNS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

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.

BNS currently has a forward P/E ratio of 11.39, while HDB has a forward P/E of 31.95. We also note that BNS has a PEG ratio of 1.09. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HDB currently has a PEG ratio of 1.54.

Another notable valuation metric for BNS is its P/B ratio of 1.35. 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 5.23.

These are just a few of the metrics contributing to BNS's Value grade of B and HDB's Value grade of F.

BNS stands above HDB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BNS is the superior value option right now.


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Bank of Nova Scotia The (BNS) - free report >>

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