Investors with an interest in Beverages - Soft drinks stocks have likely encountered both Coca-Cola European (CCEP) and Coca-Cola (KO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.
Coca-Cola European and Coca-Cola are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that CCEP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
CCEP currently has a forward P/E ratio of 21.53, while KO has a forward P/E of 25.74. We also note that CCEP has a PEG ratio of 5.32. 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. KO currently has a PEG ratio of 5.35.
Another notable valuation metric for CCEP is its P/B ratio of 2.81. 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, KO has a P/B of 10.36.
These are just a few of the metrics contributing to CCEP's Value grade of B and KO's Value grade of C.
CCEP 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 CCEP is likely the superior value option right now.
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CocaCola European Partners PLC (CCEP) : Free Stock Analysis Report
CocaCola Company The (KO) : Free Stock Analysis Report
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