CCU vs. DEO: Which Stock Should Value Investors Buy Now?

Investors interested in stocks from the Beverages - Alcohol sector have probably already heard of Cervecerias Unidas (CCU) and Diageo (DEO). 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.

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 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.

Right now, Cervecerias Unidas is sporting a Zacks Rank of #1 (Strong Buy), while Diageo 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 CCU is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CCU currently has a forward P/E ratio of 21.27, while DEO has a forward P/E of 28.93. We also note that CCU has a PEG ratio of 2.10. 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. DEO currently has a PEG ratio of 3.59.

Another notable valuation metric for CCU is its P/B ratio of 1.88. 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, DEO has a P/B of 9.50.

Based on these metrics and many more, CCU holds a Value grade of B, while DEO has a Value grade of C.

CCU is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CCU is likely the superior value option right now.

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Compania Cervecerias Unidas, S.A. (CCU) : Free Stock Analysis Report
 
Diageo plc (DEO) : Free Stock Analysis Report
 
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