Investors interested in stocks from the Mining – Gold sector have probably already heard of Alamos Gold (AGI) and Royal Gold (RGLD). But which of these two stocks presents investors with the better value opportunity right now? Let’s take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Alamos Gold has a Zacks Rank of #2 (Buy), while Royal Gold has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AGI is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
AGI currently has a forward P/E ratio of 21.83, while RGLD has a forward P/E of 25.49. We also note that AGI has a PEG ratio of 2.21. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company’s expected EPS growth rate. RGLD currently has a PEG ratio of 2.55.
Another notable valuation metric for AGI is its P/B ratio of 1.09. 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, RGLD has a P/B of 2.64.
These are just a few of the metrics contributing to AGI’s Value grade of B and RGLD’s Value grade of C.
AGI sticks out from RGLD in both our Zacks Rank and Style Scores models, so value investors will likely feel that AGI is the better option right now.
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