MGPI vs. DEO: Which Stock Should Value Investors Buy Now?
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Investors interested in Beverages - Alcohol stocks are likely familiar with MGP (MGPI) and Diageo (DEO). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both MGP and Diageo have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
MGPI currently has a forward P/E ratio of 13.05, while DEO has a forward P/E of 19.74. We also note that MGPI has a PEG ratio of 1.19. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DEO currently has a PEG ratio of 3.87.
Another notable valuation metric for MGPI is its P/B ratio of 2.01. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, DEO has a P/B of 6.35.
These metrics, and several others, help MGPI earn a Value grade of B, while DEO has been given a Value grade of C.
Both MGPI and DEO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MGPI is the superior value option right now.
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MGP Ingredients, Inc. (MGPI) : Free Stock Analysis Report
Diageo plc (DEO) : Free Stock Analysis Report