Investors interested in stocks from the Beverages - Alcohol sector have probably already heard of Kirin Holdings Co. (KNBWY) and Diageo (DEO). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, Kirin Holdings Co. is sporting a Zacks Rank of #2 (Buy), while Diageo has a Zacks Rank of #4 (Sell). This means that KNBWY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

KNBWY currently has a forward P/E ratio of 11.13, while DEO has a forward P/E of 18.80. We also note that KNBWY has a PEG ratio of 0.86. 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 4.21.

Another notable valuation metric for KNBWY is its P/B ratio of 1. The 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. By comparison, DEO has a P/B of 5.73.

Based on these metrics and many more, KNBWY holds a Value grade of A, while DEO has a Value grade of F.

KNBWY has seen stronger estimate revision activity and sports more attractive valuation metrics than DEO, so it seems like value investors will conclude that KNBWY is the superior option right now.

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