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

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Investors interested in Banks - Foreign stocks are likely familiar with Erste Group Bank AG (EBKDY - 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 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 #3 (Hold). This means that EBKDY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

EBKDY currently has a forward P/E ratio of 9.95, while HDB has a forward P/E of 28.18. We also note that EBKDY has a PEG ratio of 0.44. 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 1.30.

Another notable valuation metric for EBKDY is its P/B ratio of 0.66. 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 4.72.

Based on these metrics and many more, EBKDY holds a Value grade of B, while HDB has a Value grade of D.

EBKDY 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 EBKDY is likely the superior value option right now.


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Erste Group Bank AG (EBKDY) - free report >>

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