Investors with an interest in Beverages - Soft drinks stocks have likely encountered both Primo Brands (PRMB) and Coca-Cola European (CCEP). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Primo Brands is sporting a Zacks Rank of #2 (Buy), while Coca-Cola European has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PRMB is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
PRMB currently has a forward P/E ratio of 17.59, while CCEP has a forward P/E of 21.32. We also note that PRMB has a PEG ratio of 1.53. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CCEP currently has a PEG ratio of 2.42.
Another notable valuation metric for PRMB is its P/B ratio of 2.87. 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 4.82.
These are just a few of the metrics contributing to PRMB's Value grade of B and CCEP's Value grade of C.
PRMB has seen stronger estimate revision activity and sports more attractive valuation metrics than CCEP, so it seems like value investors will conclude that PRMB is the superior option right now.
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