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Investors with an interest in Beverages - Alcohol stocks have likely encountered both Ambev (ABEV) and Campari Group (DVDCY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Ambev has a Zacks Rank of #2 (Buy), while Campari Group has a Zacks Rank of #4 (Sell) right now. This means that ABEV's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
ABEV currently has a forward P/E ratio of 20.19, while DVDCY has a forward P/E of 37.57. We also note that ABEV has a PEG ratio of 2.80. 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. DVDCY currently has a PEG ratio of 5.01.
Another notable valuation metric for ABEV is its P/B ratio of 4.33. 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 4.68.
These metrics, and several others, help ABEV earn a Value grade of B, while DVDCY has been given a Value grade of F.
ABEV 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 ABEV is likely the superior value option right now.
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Ambev S.A. (ABEV) : Free Stock Analysis Report
Campari Group (DVDCY) : Free Stock Analysis Report
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