CCU vs. DEO: Which Stock Is the Better Value Option?
Investors looking for stocks in the Beverages - Alcohol sector might want to consider either Cervecerias Unidas (CCU) or Diageo (DEO). 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.
Cervecerias Unidas and Diageo are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
CCU currently has a forward P/E ratio of 21.63, while DEO has a forward P/E of 25.63. We also note that CCU has a PEG ratio of 2.13. 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. DEO currently has a PEG ratio of 3.08.
Another notable valuation metric for CCU is its P/B ratio of 1.75. 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, DEO has a P/B of 8.33.
These metrics, and several others, help CCU earn a Value grade of A, while DEO has been given a Value grade of D.
Both CCU and DEO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CCU is the superior value option right now.
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Compania Cervecerias Unidas, S.A. (CCU) : Free Stock Analysis Report
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