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NRDBY or RY: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Banks - Foreign sector might want to consider either Nordea Bank AB (NRDBY - Free Report) or Royal Bank (RY - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

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.

Currently, Nordea Bank AB has a Zacks Rank of #2 (Buy), while Royal Bank has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NRDBY is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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 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.

NRDBY currently has a forward P/E ratio of 9.68, while RY has a forward P/E of 10.88. We also note that NRDBY has a PEG ratio of 1.89. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. RY currently has a PEG ratio of 2.12.

Another notable valuation metric for NRDBY is its P/B ratio of 1.11. 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, RY has a P/B of 1.76.

These metrics, and several others, help NRDBY earn a Value grade of B, while RY has been given a Value grade of D.

NRDBY 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 NRDBY is likely the superior value option right now.


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