Back to top

Image: Bigstock

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

Read MoreHide Full Article

Investors with an interest in Beverages - Alcohol stocks have likely encountered both Anheuser-Busch Inbev (BUD - Free Report) and 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Anheuser-Busch Inbev and Diageo are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BUD 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

BUD currently has a forward P/E ratio of 18.25, while DEO has a forward P/E of 21.09. We also note that BUD has a PEG ratio of 1.88. 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. DEO currently has a PEG ratio of 2.59.

Another notable valuation metric for BUD is its P/B ratio of 1.42. 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, DEO has a P/B of 8.55.

These are just a few of the metrics contributing to BUD's Value grade of B and DEO's Value grade of C.

BUD stands above DEO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BUD is the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Diageo plc (DEO) - free report >>

Anheuser-Busch InBev SA/NV (BUD) - free report >>

Published in