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BBVA vs. HSBC: Which Stock Is the Better Value Option?

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Investors with an interest in Banks - Foreign stocks have likely encountered both Banco Bilbao (BBVA) and HSBC (HSBC - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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.

Currently, Banco Bilbao has a Zacks Rank of #2 (Buy), while HSBC has a Zacks Rank of #4 (Sell). This means that BBVA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

BBVA currently has a forward P/E ratio of 7.76, while HSBC has a forward P/E of 10.07. We also note that BBVA has a PEG ratio of 3.33. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HSBC currently has a PEG ratio of 7.04.

Another notable valuation metric for BBVA is its P/B ratio of 0.54. 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, HSBC has a P/B of 0.74.

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

BBVA has seen stronger estimate revision activity and sports more attractive valuation metrics than HSBC, so it seems like value investors will conclude that BBVA is the superior option right now.


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