KOF vs. PEP: Which Stock Is the Better Value Option?
Investors looking for stocks in the Beverages - Soft drinks sector might want to consider either Coca-Cola FEMSA (KOF) or PepsiCo (PEP). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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.
Currently, Coca-Cola FEMSA has a Zacks Rank of #2 (Buy), while PepsiCo has a Zacks Rank of #3 (Hold). This means that KOF's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
KOF currently has a forward P/E ratio of 15.18, while PEP has a forward P/E of 23.44. We also note that KOF has a PEG ratio of 1.07. 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 2.93.
Another notable valuation metric for KOF is its P/B ratio of 1.83. 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 13.94.
Based on these metrics and many more, KOF holds a Value grade of A, while PEP has a Value grade of C.
KOF has seen stronger estimate revision activity and sports more attractive valuation metrics than PEP, so it seems like value investors will conclude that KOF is the superior option right now.
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Coca Cola Femsa S.A.B. de C.V. (KOF) : Free Stock Analysis Report
PepsiCo, Inc. (PEP) : Free Stock Analysis Report
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