Send me real-time posts from this site at my email
Zacks

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 presents investors with the better value opportunity right now? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Both Billiton and BHP have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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 10.16, while BHP has a forward P/E of 12.30. We also note that BBL has a PEG ratio of 2.45. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BHP currently has a PEG ratio of 2.97.

Another notable valuation metric for BBL is its P/B ratio of 0.97. 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 1.78.

These metrics, and several others, help BBL earn a Value grade of A, while BHP has been given 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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
BHP Billiton PLC (BBL): Free Stock Analysis Report
 
BHP Group Limited (BHP): Free Stock Analysis Report
 
To read this article on Zacks.com click here.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue