Investors with an interest in Beverages - Soft drinks stocks have likely encountered both Fomento Economico (FMX) and Monster Beverage (MNST). 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.
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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Fomento Economico has a Zacks Rank of #1 (Strong Buy), while Monster Beverage has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FMX has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
FMX currently has a forward P/E ratio of 25.28, while MNST has a forward P/E of 37.15. We also note that FMX has a PEG ratio of 0.84. 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. MNST currently has a PEG ratio of 2.83.
Another notable valuation metric for FMX is its P/B ratio of 2.54. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MNST has a P/B of 9.63.
These metrics, and several others, help FMX earn a Value grade of B, while MNST has been given a Value grade of F.
FMX stands above MNST thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FMX is the superior value option right now.
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Fomento Economico Mexicano S.A.B. de C.V. (FMX): Free Stock Analysis Report
Monster Beverage Corporation (MNST): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).