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EBKDY 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 Erste Group Bank AG (EBKDY - Free Report) or HDFC Bank (HDB - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Erste Group Bank AG and HDFC Bank are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. Investors should feel comfortable knowing that EBKDY likely has seen a stronger improvement to its earnings outlook than HDB has recently. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

EBKDY currently has a forward P/E ratio of 14.14, while HDB has a forward P/E of 27.59. We also note that EBKDY has a PEG ratio of 0.65. 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 1.27.

Another notable valuation metric for EBKDY is its P/B ratio of 0.65. 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 5.14.

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

EBKDY sticks out from HDB in both our Zacks Rank and Style Scores models, so value investors will likely feel that EBKDY is the better option right now.


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