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

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Investors with an interest in Beverages - Alcohol stocks have likely encountered both Cervecerias Unidas (CCU - 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.

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.

Cervecerias Unidas and Diageo are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that CCU likely has seen a stronger improvement to its earnings outlook than DEO has recently. 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.

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.

CCU currently has a forward P/E ratio of 13.41, while DEO has a forward P/E of 21.79. We also note that CCU has a PEG ratio of 0.57. 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 2.80.

Another notable valuation metric for CCU is its P/B ratio of 1.88. 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 8.73.

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

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

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Diageo plc (DEO) - free report >>

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