Investors looking for stocks in the Beverages - Alcohol sector might want to consider either Ambev (ABEV) or Boston Beer (SAM). 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Ambev has a Zacks Rank of #2 (Buy), while Boston Beer has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that ABEV likely has seen a stronger improvement to its earnings outlook than SAM has recently. But this is only part of the picture for value investors.
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.
ABEV currently has a forward P/E ratio of 16.05, while SAM has a forward P/E of 24.25. We also note that ABEV has a PEG ratio of 2.19. 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. SAM currently has a PEG ratio of 2.68.
Another notable valuation metric for ABEV is its P/B ratio of 3.02. 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 3.03.
These are just a few of the metrics contributing to ABEV's Value grade of B and SAM's Value grade of C.
ABEV has seen stronger estimate revision activity and sports more attractive valuation metrics than SAM, so it seems like value investors will conclude that ABEV is the superior option right now.
#1 Semiconductor Stock to Buy (Not NVDA)
The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.
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Ambev S.A. (ABEV): Free Stock Analysis Report
The Boston Beer Company, Inc. (SAM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).