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BBL vs. BHP: Which Stock Is the Better Value Option?

Investors interested in stocks from the Mining - Miscellaneous sector have probably already heard of Billiton (BBL) and BHP (BHP). 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.

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.

Right now, both Billiton and BHP are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.

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 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.

BBL currently has a forward P/E ratio of 9.80, while BHP has a forward P/E of 11.45. We also note that BBL has a PEG ratio of 2.37. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BHP currently has a PEG ratio of 2.76.

Another notable valuation metric for BBL is its P/B ratio of 0.85. 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, BHP has a P/B of 1.58.

Based on these metrics and many more, BBL holds a Value grade of A, while BHP has a Value grade of C.

Both BBL and BHP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BBL is the superior value option right now.


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BHP Billiton PLC (BBL): Free Stock Analysis Report
 
BHP Group Limited (BHP): Free Stock Analysis Report
 
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