Investors interested in Beverages - Soft drinks stocks are likely familiar with COCA-COLA HBC (CCHGY - Free Report) and Coca-Cola (KO - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, COCA-COLA HBC is sporting a Zacks Rank of #2 (Buy), while Coca-Cola has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CCHGY has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
CCHGY currently has a forward P/E ratio of 20.17, while KO has a forward P/E of 25.50. We also note that CCHGY has a PEG ratio of 2.52. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. KO currently has a PEG ratio of 3.73.
Another notable valuation metric for CCHGY is its P/B ratio of 4.27. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, KO has a P/B of 11.30.
Based on these metrics and many more, CCHGY holds a Value grade of B, while KO has a Value grade of D.
CCHGY sticks out from KO in both our Zacks Rank and Style Scores models, so value investors will likely feel that CCHGY is the better option right now.