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ITUB or BCH: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Banks - Foreign sector might want to consider either Banco Itau (ITUB) or Banco De Chile (BCH). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Banco Itau and Banco De Chile are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that ITUB's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

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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.

ITUB currently has a forward P/E ratio of 8.31, while BCH has a forward P/E of 8.63. We also note that ITUB has a PEG ratio of 0.79. 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. BCH currently has a PEG ratio of 1.30.

Another notable valuation metric for ITUB is its P/B ratio of 1.62. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BCH has a P/B of 1.97.

These metrics, and several others, help ITUB earn a Value grade of B, while BCH has been given a Value grade of C.

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

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Itau Unibanco Holding S.A. (ITUB) : Free Stock Analysis Report

Banco De Chile (BCH) : Free Stock Analysis Report

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Zacks Investment Research