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

Zacks Equity Research

Investors interested in Beverages - Soft drinks stocks are likely familiar with Coca-Cola European (CCEP) and Primo Water (PRMW). 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.

Right now, Coca-Cola European is sporting a Zacks Rank of #2 (Buy), while Primo Water has a Zacks Rank of #3 (Hold). This means that CCEP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.

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 17.82, while PRMW has a forward P/E of 41.94. We also note that CCEP has a PEG ratio of 2.01. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PRMW currently has a PEG ratio of 3.50.

Another notable valuation metric for CCEP is its P/B ratio of 3.86. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, PRMW has a P/B of 6.11.

Based on these metrics and many more, CCEP holds a Value grade of B, while PRMW 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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Zacks Investment Research