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CCU vs. STZ: Which Stock Is the Better Value Option?

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Investors with an interest in Beverages - Alcohol stocks have likely encountered both Cervecerias Unidas (CCU - Free Report) and Constellation Brands (STZ - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Cervecerias Unidas has a Zacks Rank of #2 (Buy), while Constellation Brands has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that CCU likely has seen a stronger improvement to its earnings outlook than STZ has recently. 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.

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.

CCU currently has a forward P/E ratio of 11.36, while STZ has a forward P/E of 20.99. We also note that CCU has a PEG ratio of 0.63. 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. STZ currently has a PEG ratio of 1.94.

Another notable valuation metric for CCU is its P/B ratio of 1.27. 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, STZ has a P/B of 4.65.

These are just a few of the metrics contributing to CCU's Value grade of A and STZ's Value grade of D.

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


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