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BMO vs. BSAC: Which Stock Is the Better Value Option?

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Investors interested in Banks - Foreign stocks are likely familiar with Bank of Montreal (BMO - Free Report) and Banco Santander-Chile (BSAC - 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.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Bank of Montreal is sporting a Zacks Rank of #2 (Buy), while Banco Santander-Chile has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BMO likely has seen a stronger improvement to its earnings outlook than BSAC has recently. But this is just one factor that value investors are interested in.

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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

BMO currently has a forward P/E ratio of 11.46, while BSAC has a forward P/E of 12.78. We also note that BMO has a PEG ratio of 1.42. 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. BSAC currently has a PEG ratio of 2.22.

Another notable valuation metric for BMO is its P/B ratio of 1.29. 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, BSAC has a P/B of 1.96.

These are just a few of the metrics contributing to BMO's Value grade of B and BSAC's Value grade of C.

BMO 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 BMO is likely the superior value option right now.


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