Investors looking for stocks in the Banks - Foreign sector might want to consider either ING Groep (ING) or Westpac Banking Corporation . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, ING Groep has a Zacks Rank of #2 (Buy), while Westpac Banking Corporation has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ING has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
ING currently has a forward P/E ratio of 6.84, while WBK has a forward P/E of 12.21. We also note that ING has a PEG ratio of 3.51. 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. WBK currently has a PEG ratio of 8.14.
Another notable valuation metric for ING is its P/B ratio of 0.68. 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, WBK has a P/B of 1.45.
Based on these metrics and many more, ING holds a Value grade of A, while WBK has a Value grade of D.
ING has seen stronger estimate revision activity and sports more attractive valuation metrics than WBK, so it seems like value investors will conclude that ING is the superior option right now.