Investors interested in stocks from the Banks - Foreign sector have probably already heard of Bank of Montreal (BMO) and Banco Santander-Chile (BSAC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both Bank of Montreal and Banco Santander-Chile are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings 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.
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.
BMO currently has a forward P/E ratio of 10.66, while BSAC has a forward P/E of 11.05. We also note that BMO has a PEG ratio of 0.69. 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. BSAC currently has a PEG ratio of 0.73.
Another notable valuation metric for BMO is its P/B ratio of 1.70. 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, BSAC has a P/B of 1.96.
These are just a few of the metrics contributing to BMO's Value grade of B and BSAC's Value grade of D.
Both BMO and BSAC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BMO is the superior value option right now.
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Bank Of Montreal (BMO) : Free Stock Analysis Report
Banco Santander Chile (BSAC) : Free Stock Analysis Report
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