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HSBC vs. DBSDY: Which Stock Is the Better Value Option?

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Investors with an interest in Banks - Foreign stocks have likely encountered both HSBC (HSBC - Free Report) and DBS Group Holdings Ltd (DBSDY - 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

HSBC and DBS Group Holdings Ltd are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HSBC is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

HSBC currently has a forward P/E ratio of 8.71, while DBSDY has a forward P/E of 11.13. We also note that HSBC has a PEG ratio of 0.44. 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. DBSDY currently has a PEG ratio of 0.73.

Another notable valuation metric for HSBC is its P/B ratio of 0.63. 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, DBSDY has a P/B of 1.40.

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

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


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