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TAP vs. BF.B: Which Stock Is the Better Value Option?

Zacks Equity Research
·2 min read

Investors interested in Beverages - Alcohol stocks are likely familiar with Molson Coors Brewing (TAP) and Brown-Forman Corporation (BF.B). But which of these two stocks presents investors with the better value opportunity right now? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Molson Coors Brewing has a Zacks Rank of #2 (Buy), while Brown-Forman Corporation has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that TAP likely has seen a stronger improvement to its earnings outlook than BF.B has recently. But this is just one factor that value investors are interested in.

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.

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.

TAP currently has a forward P/E ratio of 9.98, while BF.B has a forward P/E of 31.72. We also note that TAP has a PEG ratio of 1.66. 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. BF.B currently has a PEG ratio of 4.23.

Another notable valuation metric for TAP is its P/B ratio of 0.61. 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, BF.B has a P/B of 13.47.

These metrics, and several others, help TAP earn a Value grade of A, while BF.B has been given a Value grade of D.

TAP sticks out from BF.B in both our Zacks Rank and Style Scores models, so value investors will likely feel that TAP is the better option right now.


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Molson Coors Brewing Company (TAP) : Free Stock Analysis Report
 
Brown-Forman Corporation (BF.B) : Free Stock Analysis Report
 
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