Investors interested in stocks from the Beverages - Soft drinks sector have probably already heard of Fomento Economico (FMX) and Monster Beverage (MNST). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Fomento Economico has a Zacks Rank of #2 (Buy), while Monster Beverage has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that FMX likely has seen a stronger improvement to its earnings outlook than MNST has recently. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
FMX currently has a forward P/E ratio of 22.15, while MNST has a forward P/E of 35.31. We also note that FMX has a PEG ratio of 0.99. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MNST currently has a PEG ratio of 1.60.
Another notable valuation metric for FMX is its P/B ratio of 2.60. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, MNST has a P/B of 7.34.
These metrics, and several others, help FMX earn a Value grade of B, while MNST has been given a Value grade of D.
FMX has seen stronger estimate revision activity and sports more attractive valuation metrics than MNST, so it seems like value investors will conclude that FMX is the superior option right now.
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See them now >>Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report
Monster Beverage Corporation (MNST) : Free Stock Analysis Report
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