Investors with an interest in Beverages - Soft drinks stocks have likely encountered both Keurig Dr Pepper, Inc (KDP) and Coca-Cola European (CCEP). 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Keurig Dr Pepper, Inc has a Zacks Rank of #2 (Buy), while Coca-Cola European has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that KDP likely has seen a stronger improvement to its earnings outlook than CCEP has recently. 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.
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.
KDP currently has a forward P/E ratio of 13.95, while CCEP has a forward P/E of 21.90. We also note that KDP has a PEG ratio of 1.64. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CCEP currently has a PEG ratio of 2.37.
Another notable valuation metric for KDP is its P/B ratio of 1.61. 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, CCEP has a P/B of 5.42.
Based on these metrics and many more, KDP holds a Value grade of B, while CCEP has a Value grade of C.
KDP sticks out from CCEP in both our Zacks Rank and Style Scores models, so value investors will likely feel that KDP is the better option right now.
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Keurig Dr Pepper, Inc (KDP): Free Stock Analysis Report Coca-Cola Europacific Partners (CCEP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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