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TAP vs. DEO: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Beverages - Alcohol sector might want to consider either Molson Coors Brewing (TAP - Free Report) or Diageo (DEO - Free Report) . 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Molson Coors Brewing has a Zacks Rank of #2 (Buy), while Diageo has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that TAP likely has seen a stronger improvement to its earnings outlook than DEO has recently. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

TAP currently has a forward P/E ratio of 13.06, while DEO has a forward P/E of 27.49. We also note that TAP has a PEG ratio of 2.34. 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. DEO currently has a PEG ratio of 3.19.

Another notable valuation metric for TAP is its P/B ratio of 0.85. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, DEO has a P/B of 10.17.

These metrics, and several others, help TAP earn a Value grade of B, while DEO has been given a Value grade of D.

TAP has seen stronger estimate revision activity and sports more attractive valuation metrics than DEO, so it seems like value investors will conclude that TAP is the superior option right now.


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Molson Coors Beverage Company (TAP) - free report >>

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