Back to top

Image: Bigstock

SAN vs. HDB: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in Banks - Foreign stocks are likely familiar with Banco Santander (SAN - Free Report) and HDFC Bank (HDB - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Banco Santander is sporting a Zacks Rank of #2 (Buy), while HDFC Bank has a Zacks Rank of #4 (Sell). This means that SAN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

SAN currently has a forward P/E ratio of 6.07, while HDB has a forward P/E of 20.03. We also note that SAN has a PEG ratio of 0.48. 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. HDB currently has a PEG ratio of 1.46.

Another notable valuation metric for SAN is its P/B ratio of 0.71. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HDB has a P/B of 2.03.

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

SAN stands above HDB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SAN is the superior value option right now.


See More Zacks Research for These Tickers


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


HDFC Bank Limited (HDB) - free report >>

Banco Santander, S.A. (SAN) - free report >>

Published in