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BCH vs. RY: 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 Banco De Chile (BCH - Free Report) or Royal Bank (RY - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Banco De Chile has a Zacks Rank of #2 (Buy), while Royal Bank has a Zacks Rank of #3 (Hold). This means that BCH's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

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.

BCH currently has a forward P/E ratio of 10.21, while RY has a forward P/E of 12.49. We also note that BCH has a PEG ratio of 1.01. 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. RY currently has a PEG ratio of 2.36.

Another notable valuation metric for BCH is its P/B ratio of 1.98. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, RY has a P/B of 2.09.

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

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


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