Investors looking for stocks in the Beverages - Soft drinks sector might want to consider either Fomento Economico (FMX) or 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Fomento Economico and Coca-Cola European are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FMX 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.
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.
FMX currently has a forward P/E ratio of 20.84, while CCEP has a forward P/E of 21.21. We also note that FMX has a PEG ratio of 0.70. 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. CCEP currently has a PEG ratio of 2.41.
Another notable valuation metric for FMX is its P/B ratio of 2.66. 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, CCEP has a P/B of 5.16.
These are just a few of the metrics contributing to FMX's Value grade of B and CCEP's Value grade of D.
FMX sticks out from CCEP in both our Zacks Rank and Style Scores models, so value investors will likely feel that FMX is the better option right now.
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Fomento Economico Mexicano S.A.B. de C.V. (FMX): Free Stock Analysis Report
Coca-Cola Europacific Partners (CCEP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).