Back to top

Image: Bigstock

BSBR vs. BCH: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in Banks - Foreign stocks are likely familiar with Banco Santander-Brazil (BSBR - Free Report) and Banco De Chile (BCH - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Banco Santander-Brazil has a Zacks Rank of #2 (Buy), while Banco De Chile has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BSBR has an improving earnings outlook. However, value investors will care about much more than just this.

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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

BSBR currently has a forward P/E ratio of 8.87, while BCH has a forward P/E of 14.63. We also note that BSBR has a PEG ratio of 1.08. 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. BCH currently has a PEG ratio of 2.81.

Another notable valuation metric for BSBR is its P/B ratio of 1.30. 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, BCH has a P/B of 2.35.

Based on these metrics and many more, BSBR holds a Value grade of A, while BCH has a Value grade of C.

BSBR 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 BSBR is likely the superior value option right now.


See More Zacks Research for These Tickers


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


Banco De Chile (BCH) - free report >>

Banco Santander Brasil SA (BSBR) - free report >>

Published in