Should I Invest in TAP or DEO, the Better Value Stock?

Diageo (DEO) and Molson Coors Brewing (TAP) are likely already familiar names to stockholders in the Beverages-Alcohol industry. However, at this time, which of these two companies offers investors the greater value opportunity? Well, let's examine it more closely.  

Finding exceptional bargain stocks is best accomplished by combining a high Zacks Rank with an outstanding bargain grade in our Style Scores methodology. Both our Style Scores and the tried-and-true Zacks Rank focus on earnings estimates and revisions to those expectations in order to find stocks that meet certain criteria.  

Currently, Diageo and Molson Coors Brewing are both listed as #2 (Buy) on Zacks. Since the Zacks Rank rewards companies that have seen favorable revisions to analyst estimates, investors can rest easy knowing that both of these stocks have an improving earnings future. Value investors need more than this, though.  

Several time-tested valuation metrics that value investors use to determine whether a company's shares are currently underpriced are also of interest to them.  

Among the many fundamentals used by value investors, our Value category ranks stocks according to the time-tested P/E and P/S ratios, earnings yield, cash flow per share, and other important indicators.

Compared to DEO's forward P/E of 19.38, TAP's forward P/E is 11.90 at the moment. Another thing to keep in mind is that TAP's PEG ratio is 2.35. This number is comparable to the widely-used P/E ratio, but the PEG ratio takes a company's predicted earnings growth rate into account as well. At present, DEO's PEG ratio stands at 3.41.  

With a P/B ratio of 1.08, TAP also stands out as an attractive investment. Book value, which is the market value of a company's shares divided by its total liabilities, is the basis for the price-to-book ratio. As an example, DEO's P/B ratio is 6.89.  

The Value grade of A for TAP and the Value grade of C for DEO are based on a variety of factors, some of which are listed above. Although both TAP and DEO are outstanding equities with promising futures, we believe that TAP offers better value at the moment given these valuation metrics.  

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