UBS or TD: Which Is the Better Value Stock Right Now?

Investors interested in Banks - Foreign stocks are likely familiar with UBS (UBS) and Toronto-Dominion Bank (TD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

UBS has a Zacks Rank of #1 (Strong Buy), while Toronto-Dominion Bank has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that UBS likely has seen a stronger improvement to its earnings outlook than TD has recently. But this is just one piece of the puzzle 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.

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.

UBS currently has a forward P/E ratio of 15.08, while TD has a forward P/E of 17.65. We also note that UBS has a PEG ratio of 0.82. 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. TD currently has a PEG ratio of 1.35.

Another notable valuation metric for UBS is its P/B ratio of 1.84. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TD has a P/B of 2.44.

These metrics, and several others, help UBS earn a Value grade of B, while TD has been given a Value grade of F.

UBS 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 UBS is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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