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Investors looking for stocks in the Beverages - Soft drinks sector might want to consider either Coca-Cola European (CCEP) or Coca-Cola (KO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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, both Coca-Cola European and Coca-Cola are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture for value investors.
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.
CCEP currently has a forward P/E ratio of 18.02, while KO has a forward P/E of 24.22. We also note that CCEP has a PEG ratio of 3.49. 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. KO currently has a PEG ratio of 3.82.
Another notable valuation metric for CCEP is its P/B ratio of 3.62. 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, KO has a P/B of 10.85.
Based on these metrics and many more, CCEP holds a Value grade of B, while KO has a Value grade of D.
Both CCEP and KO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CCEP is the superior value option right now.
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Coca-Cola Europacific Partners (CCEP) : Free Stock Analysis Report
CocaCola Company (The) (KO) : Free Stock Analysis Report