Back to top

Image: Bigstock

BCH or IBN: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors with an interest in Banks - Foreign stocks have likely encountered both Banco De Chile (BCH - Free Report) and ICICI Bank Limited (IBN - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Banco De Chile has a Zacks Rank of #2 (Buy), while ICICI Bank Limited has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BCH is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

BCH currently has a forward P/E ratio of 9.47, while IBN has a forward P/E of 17.78. We also note that BCH has a PEG ratio of 0.93. 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. IBN currently has a PEG ratio of 2.29.

Another notable valuation metric for BCH is its P/B ratio of 2.03. 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, IBN has a P/B of 2.60.

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

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

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

ICICI Bank Limited (IBN) - free report >>

Banco De Chile (BCH) - free report >>

Published in