Investors looking for stocks in the Banks – Foreign sector might want to consider either UBS (UBS) or Toronto-Dominion Bank (TD). 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, UBS has a Zacks Rank of #1 (Strong Buy), while Toronto-Dominion Bank has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that UBS likely has seen a stronger improvement to its earnings outlook than TD has recently. But this is just one piece of the puzzle 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.
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.
UBS currently has a forward P/E ratio of 15.41, while TD has a forward P/E of 17.90. We also note that UBS has a PEG ratio of 0.84. 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. TD currently has a PEG ratio of 1.37.
Another notable valuation metric for UBS is its P/B ratio of 1.82. 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, TD has a P/B of 2.47.
These are just a few of the metrics contributing to UBS’s Value grade of B and TD’s Value grade of F.
UBS has seen stronger estimate revision activity and sports more attractive valuation metrics than TD, so it seems like value investors will conclude that UBS is the superior option right now.
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UBS Group AG (UBS) : Free Stock Analysis Report
Toronto Dominion Bank (The) (TD) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).