Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Coca-Cola Amatil Limited stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Coca-Cola Amatil has a trailing 12 months PE ratio of 19.1, as you can see in the chart below:
If we focus on the stock’s long-term PE trend, the current level puts Coca-Cola Amatil’s current PE ratio above its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks Beverages-Soft Drinks industry’s trailing twelve months PE ratio, which stands at 22.79. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Coca-Cola Amatil has a forward PE ratio (price relative to this year’s earnings) of just 17.23, so it is fair to say that a slightly more value-oriented path may be ahead for Coca-Cola Amatil stock in the near term too.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Coca-Cola Amatil’s PEG ratio stands at just 1.72, compared with the Zacks Beverages-Soft Drinks industry average of 2.72. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Coca-Cola Amatil currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Coca-Cola Amatil a solid choice for value investors.
What About the Stock Overall?
Though Coca-Cola Amatil might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ but a Momentum score of ‘D’. This gives CCLAY a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
The long-term expected EPS growth for the company stands at 11% which could be a good indicator but the company’s industry strength is relatively low with the industry falling in the bottom 11% of all industries classified by Zacks.
The stock has a Zacks Rank #3 (Hold), which is again an unclear indicator of the stock’s future potential.
Bottom Line
Coca-Cola Amatil is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past five years, the Zacks Beverages-Soft Drinks industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' Top 10 Stocks for 2017s
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank.Be among the very first to see it>>
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Should Value Investors Pick Coca-Cola Amatil (CCLAY)?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Coca-Cola Amatil Limited stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Coca-Cola Amatil has a trailing 12 months PE ratio of 19.1, as you can see in the chart below:
If we focus on the stock’s long-term PE trend, the current level puts Coca-Cola Amatil’s current PE ratio above its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks Beverages-Soft Drinks industry’s trailing twelve months PE ratio, which stands at 22.79. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Coca-Cola Amatil has a forward PE ratio (price relative to this year’s earnings) of just 17.23, so it is fair to say that a slightly more value-oriented path may be ahead for Coca-Cola Amatil stock in the near term too.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Coca-Cola Amatil’s PEG ratio stands at just 1.72, compared with the Zacks Beverages-Soft Drinks industry average of 2.72. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Coca-Cola Amatil currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Coca-Cola Amatil a solid choice for value investors.
What About the Stock Overall?
Though Coca-Cola Amatil might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ but a Momentum score of ‘D’. This gives CCLAY a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
The long-term expected EPS growth for the company stands at 11% which could be a good indicator but the company’s industry strength is relatively low with the industry falling in the bottom 11% of all industries classified by Zacks.
The stock has a Zacks Rank #3 (Hold), which is again an unclear indicator of the stock’s future potential.
Bottom Line
Coca-Cola Amatil is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past five years, the Zacks Beverages-Soft Drinks industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' Top 10 Stocks for 2017s
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank.Be among the very first to see it>>