Investors interested in beverages and soft drinks stocks have likely come across Coca-Cola European (CCEP) and Dutch Bros (BROS). But which of these two stocks is more attractive to value investors? In this article, we’ll take a closer look to find out.
Zacks Rank and Earnings Outlook
One of the best ways to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Coca-Cola European has a Zacks Rank of #2 (Buy), while Dutch Bros has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that CCEP likely has seen a stronger improvement to its earnings outlook than BROS has recently. However, value investors will care about much more than just this.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help determine a company’s fair value.
Coca-Cola European currently has a forward P/E ratio of 17.24, while Dutch Bros has a forward P/E of 142.77. We also note that CCEP has a PEG ratio of 2.44, while BROS currently has a PEG ratio of 3.10. Another notable valuation metric for CCEP is its P/B ratio of 3.88, while BROS has a P/B of 4.89.
These metrics, and several others, help CCEP earn a Value grade of B, while BROS has been given a Value grade of D.
In conclusion, CCEP has seen stronger estimate revision activity and sports more attractive valuation metrics than BROS. Therefore, it seems like value investors will conclude that CCEP is the superior option right now.