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UBS vs. WBK: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in stocks from the Banks - Foreign sector have probably already heard of UBS (UBS) and Westpac Banking Corporation (WBK). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, UBS has a Zacks Rank of #2 (Buy), while Westpac Banking Corporation has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that UBS is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

UBS currently has a forward P/E ratio of 9.49, while WBK has a forward P/E of 13.09. We also note that UBS has a PEG ratio of 2.69. 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. WBK currently has a PEG ratio of 2.96.

Another notable valuation metric for UBS is its P/B ratio of 0.84. 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, WBK has a P/B of 1.28.

These are just a few of the metrics contributing to UBS's Value grade of A and WBK's Value grade of C.

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


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UBS Group AG (UBS) : Free Stock Analysis Report
 
Westpac Banking Corporation (WBK) : Free Stock Analysis Report
 
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