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HEINY or BF.B: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Beverages - Alcohol sector might want to consider either Heineken NV (HEINY - Free Report) or Brown-Forman B (BF.B - Free Report) . 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Heineken NV and Brown-Forman B are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HEINY has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 us determine a company's fair value.
HEINY currently has a forward P/E ratio of 15.05, while BF.B has a forward P/E of 17.23. We also note that HEINY has a PEG ratio of 1.76. 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. BF.B currently has a PEG ratio of 5.19.
Another notable valuation metric for HEINY is its P/B ratio of 1.94. 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, BF.B has a P/B of 3.95.
Based on these metrics and many more, HEINY holds a Value grade of B, while BF.B 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.