Yahoo Finance HEINY or DEO: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Beverages - Alcohol sector have probably already heard of Heineken NV (HEINY) and Diageo (DEO). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 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.
Currently, Heineken NV has a Zacks Rank of #2 (Buy), while Diageo has a Zacks Rank of #4 (Sell). This means that HEINY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
HEINY currently has a forward P/E ratio of 20.15, while DEO has a forward P/E of 22.90. We also note that HEINY has a PEG ratio of 1.96. 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 2.94.
Another notable valuation metric for HEINY is its P/B ratio of 2.86. 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, DEO has a P/B of 9.17.
Based on these metrics and many more, HEINY holds a Value grade of B, while DEO has a Value grade of D.
HEINY 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 HEINY is likely the superior value option right now.
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Heineken NV (HEINY) : Free Stock Analysis Report
Diageo plc (DEO) : Free Stock Analysis Report