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BDORY or HDB: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Banks - Foreign sector have probably already heard of Banco Do Brasil SA (BDORY - Free Report) and HDFC Bank (HDB - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Banco Do Brasil SA has a Zacks Rank of #1 (Strong Buy), while HDFC Bank has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BDORY is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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 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.

BDORY currently has a forward P/E ratio of 3.73, while HDB has a forward P/E of 21.07. We also note that BDORY has a PEG ratio of 0.21. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HDB currently has a PEG ratio of 1.06.

Another notable valuation metric for BDORY is its P/B ratio of 0.67. 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, HDB has a P/B of 3.45.

These are just a few of the metrics contributing to BDORY's Value grade of A and HDB's Value grade of D.

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


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