Investors with an interest in Beverages - Alcohol stocks have likely encountered both Molson Coors Brewing (TAP) and Anheuser-Busch Inbev (BUD). But which of these two companies is the best option for those looking for undervalued stocks? 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 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.
Molson Coors Brewing has a Zacks Rank of #2 (Buy), while Anheuser-Busch Inbev has a Zacks Rank of #3 (Hold) right now. This means that TAP'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 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.
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.
TAP currently has a forward P/E ratio of 10.19, while BUD has a forward P/E of 29.28. We also note that TAP has a PEG ratio of 2.74. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BUD currently has a PEG ratio of 18.53.
Another notable valuation metric for TAP is its P/B ratio of 1.28. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, BUD has a P/B of 1.94.
These are just a few of the metrics contributing to TAP's Value grade of B and BUD's Value grade of C.
TAP 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 TAP is likely the superior value option right now.
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Molson Coors Beverage Company (TAP) : Free Stock Analysis Report
AnheuserBusch InBev SANV (BUD) : Free Stock Analysis Report
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