Investors looking for stocks in the Beverages - Soft drinks sector might want to consider either Coca-Cola European (CCEP) or PepsiCo (PEP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Coca-Cola European and PepsiCo are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, 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 only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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 18.14, while PEP has a forward P/E of 24.91. We also note that CCEP has a PEG ratio of 2.04. 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. PEP currently has a PEG ratio of 3.56.
Another notable valuation metric for CCEP is its P/B ratio of 3.45. 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 13.44.
These metrics, and several others, help CCEP earn a Value grade of B, while PEP has been given a Value grade of D.
CCEP stands above PEP 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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Coca-Cola European Partners PLC (CCEP) : Free Stock Analysis Report
PepsiCo, Inc. (PEP) : Free Stock Analysis Report
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