DNBBY vs. TD: Which Stock Is the Better Value Option?
Investors interested in stocks from the Banks - Foreign sector have probably already heard of DNB Bank ASA (DNBBY) and Toronto-Dominion Bank (TD). 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.
DNB Bank ASA and Toronto-Dominion Bank are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that DNBBY likely has seen a stronger improvement to its earnings outlook than TD has recently. But this is just one factor that value investors are interested in.
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.
DNBBY currently has a forward P/E ratio of 8.61, while TD has a forward P/E of 10.24. We also note that DNBBY has a PEG ratio of 1.58. 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. TD currently has a PEG ratio of 1.69.
Another notable valuation metric for DNBBY is its P/B ratio of 1.31. 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, TD has a P/B of 1.43.
Based on these metrics and many more, DNBBY holds a Value grade of B, while TD has a Value grade of F.
DNBBY 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 DNBBY is likely the superior value option right now.
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DNB Bank ASA (DNBBY) : Free Stock Analysis Report
Toronto Dominion Bank (The) (TD) : Free Stock Analysis Report
