Investors with an interest in Beverages - Alcohol stocks have likely encountered both Heineken NV (HEINY) and Brown-Forman B (BF.B). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Heineken NV and Brown-Forman B 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 piece of the puzzle for value investors.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
HEINY currently has a forward P/E ratio of 15.59, while BF.B has a forward P/E of 18.44. We also note that HEINY has a PEG ratio of 2.58. 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. BF.B currently has a PEG ratio of 5.67.
Another notable valuation metric for HEINY is its P/B ratio of 2.03. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, BF.B has a P/B of 4.20.
Based on these metrics and many more, HEINY holds a Value grade of B, while BF.B has a Value grade of D.
Both HEINY and BF.B are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HEINY is the superior value option right now.
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Heineken NV (HEINY): Free Stock Analysis Report Brown-Forman Corporation (BF.B): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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