Investors interested in Beverages - Soft drinks stocks are likely familiar with Coca-Cola European (CCEP) and COCA-COLA HBC (CCHGY). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Coca-Cola European has a Zacks Rank of #2 (Buy), while COCA-COLA HBC has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CCEP likely has seen a stronger improvement to its earnings outlook than CCHGY has recently. But this is only part of the picture for value investors.
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.
CCEP currently has a forward P/E ratio of 15.72, while CCHGY has a forward P/E of 18.41. We also note that CCEP has a PEG ratio of 1.80. 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. CCHGY currently has a PEG ratio of 2.30.
Another notable valuation metric for CCEP is its P/B ratio of 2.84. 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, CCHGY has a P/B of 3.19.
These metrics, and several others, help CCEP earn a Value grade of B, while CCHGY has been given a Value grade of C.
CCEP stands above CCHGY 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
COCA-COLA HBC (CCHGY) : Free Stock Analysis Report
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