Investors interested in beverage and alcohol stocks are likely familiar with Kirin Holdings Co. (KNBWY) and Diageo (DEO). But which of these two stocks is more attractive to value investors? To find out, we need to take a closer look at the two.
The best way to find great value stocks is to combine a strong Zacks Rank with an impressive 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.
Kirin Holdings Co. and Diageo currently carry Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively. The Zacks Rank favors stocks that have recently seen positive earnings estimate revisions, so investors can take comfort in the fact that KNBWY has an improved earnings outlook. However, for value investors, this is only part of the picture.
Value investors analyze a variety of traditional and proven metrics to find companies that they believe are undervalued at their current share price levels.
Our Value category evaluates stocks using a number of key metrics, including the tried-and-true P/E, P/S, earnings yield and cash flow per share, as well as a number of other fundamental metrics commonly used by value investors.
KNBWY currently has a forward P/E ratio of 13.61, while DEO has a forward P/E ratio of 18.93. We also note that KNBWY has a PEG ratio of 0.77. This popular number is similar to the widely used P/E ratio, but the PEG ratio also takes into account a company’s expected EPS growth rate. DEO currently has a PEG ratio of 4.01.
Another important valuation metric for KNBWY is its P/B ratio of 1.32. P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. For comparison, DEO has a P/B ratio of 6.19.
These and several other metrics help KNBWY earn a B rating, while DEO receives a D rating.
KNBWY is priced above DEO thanks to its solid earnings outlook, and based on these valuation numbers, we also believe KNBWY is the better value option currently.
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Kirin Holdings Co. (KNBWY): Free Stock Analysis Report
Diageo plc (DEO): Free Stock Analysis Report
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