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

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Investors with an interest in Banks - Foreign stocks have likely encountered both Banco Santander-Brazil (BSBR - Free Report) and Hang Seng Bank Ltd. (HSNGY - 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.

Right now, Banco Santander-Brazil is sporting a Zacks Rank of #2 (Buy), while Hang Seng Bank Ltd. 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 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 9.09, while HSNGY has a forward P/E of 16.23. We also note that BSBR has a PEG ratio of 0.91. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HSNGY currently has a PEG ratio of 2.12.

Another notable valuation metric for BSBR is its P/B ratio of 1.32. 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, HSNGY has a P/B of 1.45.

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


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

Hang Seng Bank Ltd. (HSNGY) - free report >>

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