Which stock offers the better value option?

Investors interested in Banks – Foreign Stocks have probably come across both HSBC (HSBC) and DBS Group Holdings Ltd (DBSDY). But which of these two stocks is more attractive to value investors? To find out, we need to take a closer look at the two.

Everyone has their own methods for finding great value opportunities, but our model combines an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

HSBC and DBS Group Holdings Ltd currently sport Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively. This system places emphasis on companies that have seen positive earnings estimate revisions. Investors should therefore feel confident that HSBC’s earnings outlook is likely to improve on a larger scale. However, this is just one of the factors of interest to value investors.

Value investors also try to analyze a wide range of traditional numbers and metrics to determine whether a company is undervalued at its current share price level.

The Style Score Value assessment incorporates a number of important fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and numerous other key statistics commonly used by value investors.

HSBC currently has a forward P/E ratio of 8.71, while DBSDY has a forward P/E ratio of 11.13. We also note that HSBC has a PEG ratio of 0.44. This figure is similar to the commonly used P/E ratio, with the PEG ratio also taking into account a company’s expected earnings growth rate. DBSDY currently has a PEG ratio of 0.73.

Another important valuation metric for HSBC is its P/B ratio of 0.63. The P/B ratio is used to compare the market value of a stock to its book value, which is defined as total assets minus total liabilities. For comparison, DBSDY has a P/B ratio of 1.40.

These and several other metrics help HSBC earn a B rating, while DBSDY earns a D rating.

HSBC stands out from DBSDY in both our Zacks Rank and Style Score models, so value investors likely consider HSBC to be the better option right now.

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HSBC Holdings plc (HSBC): Free Stock Analysis Report

DBS Group Holdings Ltd (DBSDY): Free Stock Analysis Report

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