Investors with an interest in Beverages - Soft drinks stocks have likely encountered both COCA-COLA HBC (CCHGY - Free Report) and Coca-Cola (KO - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, COCA-COLA HBC has a Zacks Rank of #2 (Buy), while Coca-Cola has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CCHGY is likely seeing its earnings outlook improve to a greater extent. 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 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.
CCHGY currently has a forward P/E ratio of 21.54, while KO has a forward P/E of 25.42. We also note that CCHGY has a PEG ratio of 2.69. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. KO currently has a PEG ratio of 3.72.
Another notable valuation metric for CCHGY is its P/B ratio of 4.59. 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 11.06.
These metrics, and several others, help CCHGY earn a Value grade of B, while KO has been given a Value grade of D.
CCHGY stands above KO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CCHGY is the superior value option right now.