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

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Investors interested in Banks - Foreign stocks are likely familiar with Bank of Nova Scotia (BNS - Free Report) and 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, both Bank of Nova Scotia and HDFC Bank are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

BNS currently has a forward P/E ratio of 11.80, while HDB has a forward P/E of 31.90. We also note that BNS has a PEG ratio of 1.12. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HDB currently has a PEG ratio of 1.43.

Another notable valuation metric for BNS is its P/B ratio of 1.39. 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, HDB has a P/B of 5.01.

These metrics, and several others, help BNS earn a Value grade of B, while HDB has been given a Value grade of D.

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


In-Depth Zacks Research for the Tickers Above


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

HDFC Bank Limited (HDB) - free report >>

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