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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 presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, Erste Group Bank AG is sporting a Zacks Rank of #2 (Buy), while HDFC Bank has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EBKDY has an improving earnings outlook. But this is only part of the picture 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.

EBKDY currently has a forward P/E ratio of 9.35, while HDB has a forward P/E of 27.72. We also note that EBKDY has a PEG ratio of 0.41. 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. HDB currently has a PEG ratio of 1.27.

Another notable valuation metric for EBKDY is its P/B ratio of 0.62. 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, HDB has a P/B of 4.64.

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

EBKDY has seen stronger estimate revision activity and sports more attractive valuation metrics than HDB, so it seems like value investors will conclude that EBKDY is the superior option right now.


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