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SHG vs. UOVEY: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Banks - Foreign sector might want to consider either Shinhan Financial (SHG - Free Report) or United Overseas Bank Ltd. (UOVEY - Free Report) . 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.

Shinhan Financial has a Zacks Rank of #1 (Strong Buy), while United Overseas Bank Ltd. has a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SHG 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 are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 3.88, while UOVEY has a forward P/E of 8.30. We also note that SHG has a PEG ratio of 1.20. 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. UOVEY currently has a PEG ratio of 1.23.

Another notable valuation metric for SHG is its P/B ratio of 0.30. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, UOVEY has a P/B of 1.11.

Based on these metrics and many more, SHG holds a Value grade of A, while UOVEY has a Value grade of C.

SHG sticks out from UOVEY 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 report >>

United Overseas Bank Ltd. (UOVEY) - free report >>

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