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

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Investors looking for stocks in the Banks - Foreign sector might want to consider either Societe Generale Group (SCGLY - Free Report) or HDFC Bank (HDB - 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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, Societe Generale Group is sporting a Zacks Rank of #2 (Buy), while HDFC 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 SCGLY 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 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.

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.

SCGLY currently has a forward P/E ratio of 7.84, while HDB has a forward P/E of 21.36. We also note that SCGLY has a PEG ratio of 0.29. 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. HDB currently has a PEG ratio of 2.30.

Another notable valuation metric for SCGLY is its P/B ratio of 0.43. 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 2.67.

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

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


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