HEINY vs. DEO: Which Stock Is the Better Value Option?
Investors interested in Beverages - Alcohol stocks are likely familiar with Heineken NV (HEINY) and Diageo (DEO). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Right now, Heineken NV is sporting a Zacks Rank of #2 (Buy), while Diageo has a Zacks Rank of #3 (Hold). This means that HEINY'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.
HEINY currently has a forward P/E ratio of 16.65, while DEO has a forward P/E of 18.99. We also note that HEINY has a PEG ratio of 1.94. 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. DEO currently has a PEG ratio of 3.06.
Another notable valuation metric for HEINY is its P/B ratio of 2.55. 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, DEO has a P/B of 7.86.
Based on these metrics and many more, HEINY holds a Value grade of B, while DEO has a Value grade of D.
HEINY sticks out from DEO in both our Zacks Rank and Style Scores models, so value investors will likely feel that HEINY is the better option right now.
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Heineken NV (HEINY) : Free Stock Analysis Report
Diageo plc (DEO) : Free Stock Analysis Report
