Investors interested in stocks from the Banks - Foreign sector have probably already heard of Shinhan Financial (SHG) and Banco Itau (ITUB). But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Shinhan Financial and Banco Itau are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SHG has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

SHG currently has a forward P/E ratio of 6.26, while ITUB has a forward P/E of 7.60. We also note that SHG has a PEG ratio of 0.64. 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. ITUB currently has a PEG ratio of 0.77.

Another notable valuation metric for SHG is its P/B ratio of 0.50. 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, ITUB has a P/B of 1.53.

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

SHG has seen stronger estimate revision activity and sports more attractive valuation metrics than ITUB, so it seems like value investors will conclude that SHG is the superior option right now.

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Shinhan Financial Group Co Ltd (SHG) : Free Stock Analysis Report

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

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