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LYG vs. NABZY: 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 Lloyds (LYG - Free Report) or National Australia Bank Ltd. (NABZY - 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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, Lloyds is sporting a Zacks Rank of #2 (Buy), while National Australia Bank Ltd. has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that LYG is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

LYG currently has a forward P/E ratio of 6.11, while NABZY has a forward P/E of 13.72. We also note that LYG has a PEG ratio of 0.20. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. NABZY currently has a PEG ratio of 1.14.

Another notable valuation metric for LYG is its P/B ratio of 0.60. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, NABZY has a P/B of 1.49.

These metrics, and several others, help LYG earn a Value grade of A, while NABZY has been given a Value grade of D.

LYG 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 LYG is likely the superior value option right now.


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Lloyds Banking Group PLC (LYG) - free report >>

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