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

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Investors interested in Banks - Foreign stocks are likely familiar with Banco Santander-Brazil (BSBR - Free Report) and HDFC Bank (HDB - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Banco Santander-Brazil has a Zacks Rank of #1 (Strong Buy), while HDFC Bank has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that BSBR likely has seen a stronger improvement to its earnings outlook than HDB has recently. However, value investors will care about much more than just this.

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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

BSBR currently has a forward P/E ratio of 14.68, while HDB has a forward P/E of 29.75. We also note that BSBR has a PEG ratio of 1.02. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HDB currently has a PEG ratio of 1.20.

Another notable valuation metric for BSBR is its P/B ratio of 2.21. 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, HDB has a P/B of 4.72.

These metrics, and several others, help BSBR earn a Value grade of B, while HDB has been given a Value grade of F.

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


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HDFC Bank Limited (HDB) - free report >>

Banco Santander Brasil SA (BSBR) - free report >>

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