Back to top

Image: Bigstock

BSMX vs. RY: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors looking for stocks in the Banks - Foreign sector might want to consider either Santander Mexico (BSMX) or Royal Bank (RY - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Santander Mexico has a Zacks Rank of #2 (Buy), while Royal Bank has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BSMX has an improving earnings outlook. But this is only part of the picture for value investors.

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 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.

BSMX currently has a forward P/E ratio of 8.44, while RY has a forward P/E of 11.99. We also note that BSMX has a PEG ratio of 2.01. 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. RY currently has a PEG ratio of 2.14.

Another notable valuation metric for BSMX is its P/B ratio of 1.32. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, RY has a P/B of 2.01.

These are just a few of the metrics contributing to BSMX's Value grade of A and RY's Value grade of C.

BSMX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BSMX is likely the superior value option right now.


In-Depth Zacks Research for the Tickers Above


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


Royal Bank Of Canada (RY) - free report >>

Published in