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MFG vs. HDB: Which Stock Is the Better Value Option?

MFG vs. HDB: Which Stock Is the Better Value Option?

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This story originally appeared on Zacks

Investors interested in Banks - Foreign stocks are likely familiar with Mizuho (MFG) and HDFC Bank (HDB). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

- Zacks

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Mizuho has a Zacks Rank of #2 (Buy), while HDFC Bank has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MFG has an improving earnings outlook. But this is only part of the picture 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.

MFG currently has a forward P/E ratio of 6.39, while HDB has a forward P/E of 28.69. We also note that MFG has a PEG ratio of 0.79. 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. HDB currently has a PEG ratio of 1.30.

Another notable valuation metric for MFG is its P/B ratio of 0.39. 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 4.62.

Based on these metrics and many more, MFG holds a Value grade of B, while HDB has a Value grade of D.

MFG stands above HDB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MFG is the superior value option right now.



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Mizuho Financial Group, Inc. (MFG): Free Stock Analysis Report

 

HDFC Bank Limited (HDB): Free Stock Analysis Report

 

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