SHG or EBKDY: Which Is the Better Value Stock Right Now?

Investors with an interest in Banks - Foreign stocks have likely encountered both Shinhan Financial (SHG) and Erste Group Bank AG (EBKDY). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Shinhan Financial and Erste Group Bank AG are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. Investors should feel comfortable knowing that SHG likely has seen a stronger improvement to its earnings outlook than EBKDY has recently. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

SHG currently has a forward P/E ratio of 7.62, while EBKDY has a forward P/E of 9.66. We also note that SHG has a PEG ratio of 0.49. 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. EBKDY currently has a PEG ratio of 0.53.

Another notable valuation metric for SHG is its P/B ratio of 0.7. 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, EBKDY has a P/B of 1.1.

These metrics, and several others, help SHG earn a Value grade of B, while EBKDY has been given a Value grade of C.

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

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Shinhan Financial Group Co Ltd (SHG): Free Stock Analysis Report

Erste Group Bank AG (EBKDY): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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