Investors looking for stocks in the Banks - Foreign sector might want to consider either The Bank of East Asia Ltd. (BKEAY) or Banco Itau (ITUB). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, The Bank of East Asia Ltd. has a Zacks Rank of #2 (Buy), while Banco Itau has a Zacks Rank of #4 (Sell). This means that BKEAY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

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 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.

BKEAY currently has a forward P/E ratio of 6.34, while ITUB has a forward P/E of 8.10. We also note that BKEAY 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. ITUB currently has a PEG ratio of 0.99.

Another notable valuation metric for BKEAY is its P/B ratio of 0.26. 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 1.45.

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

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

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The Bank of East Asia Ltd. (BKEAY) : Free Stock Analysis Report

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

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

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