Investors interested in stocks from the Beverages - Alcohol sector have probably already heard of Anheuser-Busch Inbev (BUD) and Boston Beer (SAM). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Anheuser-Busch Inbev is sporting a Zacks Rank of #2 (Buy), while Boston Beer has a Zacks Rank of #5 (Strong Sell). This means that BUD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
BUD currently has a forward P/E ratio of 19.18, while SAM has a forward P/E of 21.26. We also note that BUD has a PEG ratio of 1.37. 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. SAM currently has a PEG ratio of 1.76.
Another notable valuation metric for BUD is its P/B ratio of 1.61. 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, SAM has a P/B of 2.66.
These are just a few of the metrics contributing to BUD's Value grade of B and SAM's Value grade of C.
BUD has seen stronger estimate revision activity and sports more attractive valuation metrics than SAM, so it seems like value investors will conclude that BUD is the superior option right now.
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Anheuser-Busch InBev SA/NV (BUD): Free Stock Analysis Report The Boston Beer Company, Inc. (SAM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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