Investors interested in stocks from the Banks - Foreign sector have probably already heard of Bank of Nova Scotia (BNS) and Royal Bank (RY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, Bank of Nova Scotia is sporting a Zacks Rank of #2 (Buy), while Royal Bank has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BNS is likely seeing its earnings outlook improve to a greater extent. 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.

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.

BNS currently has a forward P/E ratio of 10.13, while RY has a forward P/E of 12.76. We also note that BNS has a PEG ratio of 1.54. 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. RY currently has a PEG ratio of 1.86.

Another notable valuation metric for BNS is its P/B ratio of 1.18. 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, RY has a P/B of 2.05.

These are just a few of the metrics contributing to BNS's Value grade of B and RY's Value grade of D.

BNS stands above RY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BNS 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

Bank of Nova Scotia (The) (BNS) : Free Stock Analysis Report

Royal Bank Of Canada (RY) : Free Stock Analysis Report