Investors looking for stocks in the Beverages - Soft drinks sector might want to consider either Coca-Cola European (CCEP) or Dutch Bros (BROS). 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 European is sporting a Zacks Rank of #2 (Buy), while Dutch Bros has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CCEP has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
CCEP currently has a forward P/E ratio of 16.21, while BROS has a forward P/E of 179.74. We also note that CCEP has a PEG ratio of 2.30. 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. BROS currently has a PEG ratio of 3.91.
Another notable valuation metric for CCEP is its P/B ratio of 3.65. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, BROS has a P/B of 5.17.
These metrics, and several others, help CCEP earn a Value grade of A, while BROS has been given a Value grade of C.
CCEP stands above BROS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CCEP is the superior value option right now.
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