Investors interested in Beverages - Soft drinks stocks are likely familiar with Coca-Cola European (CCEP) and Coca-Cola (KO). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.
Currently, Coca-Cola European has a Zacks Rank of #1 (Strong Buy), while Coca-Cola 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. However, value investors will care about much more than just this.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
CCEP currently has a forward P/E ratio of 20.76, while KO has a forward P/E of 25.22. We also note that CCEP has a PEG ratio of 5.13. 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. KO currently has a PEG ratio of 5.24.
Another notable valuation metric for CCEP is its P/B ratio of 2.71. 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, KO has a P/B of 9.93.
Based on these metrics and many more, CCEP holds a Value grade of B, while KO has a Value grade of D.
CCEP is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CCEP is likely the superior value option right now.
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CocaCola European Partners PLC (CCEP) : Free Stock Analysis Report
CocaCola Company The (KO) : Free Stock Analysis Report
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