Investors interested in Beverages - Alcohol stocks are likely familiar with Molson Coors Brewing (TAP - Free Report) and Campari Group (DVDCY - 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.
Molson Coors Brewing has a Zacks Rank of #2 (Buy), while Campari Group has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TAP has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
TAP currently has a forward P/E ratio of 12.70, while DVDCY has a forward P/E of 34.24. We also note that TAP has a PEG ratio of 2.47. 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. DVDCY currently has a PEG ratio of 4.57.
Another notable valuation metric for TAP is its P/B ratio of 0.96. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, DVDCY has a P/B of 4.14.
Based on these metrics and many more, TAP holds a Value grade of A, while DVDCY has a Value grade of F.
TAP sticks out from DVDCY in both our Zacks Rank and Style Scores models, so value investors will likely feel that TAP is the better option right now.