Back to top

Image: Bigstock

UBS or HDB: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors looking for stocks in the Banks - Foreign sector might want to consider either UBS (UBS - Free Report) or HDFC Bank (HDB - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, UBS has 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 UBS has an improving earnings outlook. 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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

UBS currently has a forward P/E ratio of 7.58, while HDB has a forward P/E of 16.83. We also note that UBS has a PEG ratio of 0.59. 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. HDB currently has a PEG ratio of 0.75.

Another notable valuation metric for UBS is its P/B ratio of 1.02. 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 2.94.

These are just a few of the metrics contributing to UBS's Value grade of A and HDB's Value grade of C.

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


In-Depth Zacks Research for the Tickers Above


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


UBS Group AG (UBS) - free report >>

HDFC Bank Limited (HDB) - free report >>

Published in