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Investors with an interest in Banks - Foreign stocks have likely encountered both Canadian Imperial Bank (CM) and DBS Group Holdings Ltd (DBSDY). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Canadian Imperial Bank is sporting a Zacks Rank of #2 (Buy), while DBS Group Holdings Ltd has a Zacks Rank of #3 (Hold). This means that CM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
CM currently has a forward P/E ratio of 10.58, while DBSDY has a forward P/E of 11.63. We also note that CM has a PEG ratio of 1.31. 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. DBSDY currently has a PEG ratio of 3.49.
Another notable valuation metric for CM is its P/B ratio of 1.42. 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, DBSDY has a P/B of 2.
Based on these metrics and many more, CM holds a Value grade of B, while DBSDY has a Value grade of D.
CM is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CM is likely the superior value option right now.
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Canadian Imperial Bank of Commerce (CM) : Free Stock Analysis Report
DBS Group Holdings Ltd (DBSDY) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).