Back to top

Image: Bigstock

SHG or CM: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in Banks - Foreign stocks are likely familiar with Shinhan Financial (SHG - Free Report) and Canadian Imperial Bank (CM - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Shinhan Financial has a Zacks Rank of #1 (Strong Buy), while Canadian Imperial Bank has a Zacks Rank of #3 (Hold). This means that SHG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.

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.

SHG currently has a forward P/E ratio of 5.13, while CM has a forward P/E of 9.90. We also note that SHG has a PEG ratio of 0.62. 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. CM currently has a PEG ratio of 2.34.

Another notable valuation metric for SHG is its P/B ratio of 0.37. 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, CM has a P/B of 1.27.

Based on these metrics and many more, SHG holds a Value grade of A, while CM has a Value grade of D.

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


See More Zacks Research for These Tickers


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


Canadian Imperial Bank of Commerce (CM) - free report >>

Shinhan Financial Group Co Ltd (SHG) - free report >>

Published in