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

·2-min read

Investors with an interest in Banks - Foreign stocks have likely encountered both Toronto-Dominion Bank (TD) and HDFC Bank (HDB). 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Toronto-Dominion Bank is sporting a Zacks Rank of #2 (Buy), while HDFC Bank has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TD has an improving earnings 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.

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.

TD currently has a forward P/E ratio of 10.55, while HDB has a forward P/E of 26. We also note that TD has a PEG ratio of 0.91. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HDB currently has a PEG ratio of 1.20.

Another notable valuation metric for TD is its P/B ratio of 1.72. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HDB has a P/B of 4.36.

These are just a few of the metrics contributing to TD's Value grade of B and HDB's Value grade of C.

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


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Toronto Dominion Bank The (TD) : Free Stock Analysis Report
 
HDFC Bank Limited (HDB) : Free Stock Analysis Report
 
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Zacks Investment Research

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