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LYG vs. TD: Which Stock Is the Better Value Option?

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Investors with an interest in Banks - Foreign stocks have likely encountered both Lloyds (LYG - Free Report) and Toronto-Dominion Bank (TD - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Lloyds has a Zacks Rank of #2 (Buy), while Toronto-Dominion Bank has a Zacks Rank of #3 (Hold). This means that LYG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

LYG currently has a forward P/E ratio of 8.54, while TD has a forward P/E of 9.25. We also note that LYG has a PEG ratio of 1.16. 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. TD currently has a PEG ratio of 1.49.

Another notable valuation metric for LYG is its P/B ratio of 0.73. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, TD has a P/B of 1.28.

These are just a few of the metrics contributing to LYG's Value grade of B and TD's Value grade of F.

LYG has seen stronger estimate revision activity and sports more attractive valuation metrics than TD, so it seems like value investors will conclude that LYG is the superior option right now.


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Toronto Dominion Bank (The) (TD) - free report >>

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