Investors with an interest in Beverages - Alcohol stocks have likely encountered both Cervecerias Unidas (CCU) and Boston Beer (SAM). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Cervecerias Unidas and Boston Beer are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CCU has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
CCU currently has a forward P/E ratio of 17.25, while SAM has a forward P/E of 25.12. We also note that CCU has a PEG ratio of 1.25. 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 1.68.
Another notable valuation metric for CCU is its P/B ratio of 1.50. 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, SAM has a P/B of 2.86.
These metrics, and several others, help CCU earn a Value grade of A, while SAM has been given a Value grade of C.
CCU has seen stronger estimate revision activity and sports more attractive valuation metrics than SAM, so it seems like value investors will conclude that CCU is the superior option right now.
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Compania Cervecerias Unidas, S.A. (CCU): 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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