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SMFG vs. UOVEY: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Banks - Foreign sector have probably already heard of Sumitomo Mitsui (SMFG - Free Report) and United Overseas Bank Ltd. (UOVEY - 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.

Sumitomo Mitsui and United Overseas Bank Ltd. are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SMFG is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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 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.

SMFG currently has a forward P/E ratio of 9.53, while UOVEY has a forward P/E of 9.71. We also note that SMFG has a PEG ratio of 0.59. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. UOVEY currently has a PEG ratio of 1.53.

Another notable valuation metric for SMFG is its P/B ratio of 0.90. 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, UOVEY has a P/B of 1.23.

These are just a few of the metrics contributing to SMFG's Value grade of B and UOVEY's Value grade of C.

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


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Sumitomo Mitsui Financial Group Inc (SMFG) - free report >>

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