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Investors interested in stocks from the Banks - Foreign sector have probably already heard of KB Financial (KB) and Canadian Imperial Bank (CM). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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.
Both KB Financial and Canadian Imperial Bank have a Zacks Rank of # 1 (Strong Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture 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.
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.
KB currently has a forward P/E ratio of 7.09, while CM has a forward P/E of 11.77. We also note that KB has a PEG ratio of 0.46. 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. CM currently has a PEG ratio of 1.90.
Another notable valuation metric for KB is its P/B ratio of 0.65. 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, CM has a P/B of 1.54.
These metrics, and several others, help KB earn a Value grade of B, while CM has been given a Value grade of D.
Both KB and CM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that KB is the superior value option right now.
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KB Financial Group Inc (KB) : Free Stock Analysis Report
Canadian Imperial Bank of Commerce (CM) : Free Stock Analysis Report