Back to top

Image: Bigstock

EBKDY vs. NABZY: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in stocks from the Banks - Foreign sector have probably already heard of Erste Group Bank AG (EBKDY - Free Report) and National Australia Bank Ltd. (NABZY - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Erste Group Bank AG and National Australia Bank Ltd. are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EBKDY has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

EBKDY currently has a forward P/E ratio of 5.77, while NABZY has a forward P/E of 13.45. We also note that EBKDY has a PEG ratio of 0.58. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NABZY currently has a PEG ratio of 3.89.

Another notable valuation metric for EBKDY is its P/B ratio of 0.71. 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, NABZY has a P/B of 1.61.

These are just a few of the metrics contributing to EBKDY's Value grade of B and NABZY's Value grade of D.

EBKDY 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 EBKDY is likely the superior value option right now.


See More Zacks Research for These Tickers


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


National Australia Bank Ltd. (NABZY) - free report >>

Erste Group Bank AG (EBKDY) - free report >>

Published in