U.S. Markets closed

CCEP or PEP: Which Is the Better Value Stock Right Now?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·2 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Investors interested in stocks from the Beverages - Soft drinks sector have probably already heard of Coca-Cola European (CCEP) and PepsiCo (PEP). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Coca-Cola European has a Zacks Rank of #2 (Buy), while PepsiCo has a Zacks Rank of #3 (Hold) right now. This means that CCEP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.

CCEP currently has a forward P/E ratio of 17.11, while PEP has a forward P/E of 23.85. We also note that CCEP has a PEG ratio of 1.93. 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. PEP currently has a PEG ratio of 3.41.

Another notable valuation metric for CCEP is its P/B ratio of 3.59. 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, PEP has a P/B of 13.89.

Based on these metrics and many more, CCEP holds a Value grade of B, while PEP has a Value grade of C.

CCEP has seen stronger estimate revision activity and sports more attractive valuation metrics than PEP, so it seems like value investors will conclude that CCEP is the superior option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Coca-Cola European Partners PLC (CCEP) : Free Stock Analysis Report
 
PepsiCo, Inc. (PEP) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research