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BUD or DEO: Which Is the Better Value Stock Right Now?

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Investors interested in Beverages - Alcohol stocks are likely familiar with Anheuser-Busch Inbev (BUD - Free Report) and Diageo (DEO - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

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.

Anheuser-Busch Inbev and Diageo are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that BUD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

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.

BUD currently has a forward P/E ratio of 19.28, while DEO has a forward P/E of 21.87. We also note that BUD has a PEG ratio of 2.13. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DEO currently has a PEG ratio of 2.54.

Another notable valuation metric for BUD is its P/B ratio of 1.48. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, DEO has a P/B of 8.98.

Based on these metrics and many more, BUD holds a Value grade of B, while DEO has a Value grade of D.

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


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