Investors interested in Mining – Miscellaneous stocks are likely familiar with BHP (BHP) and Wheaton Precious Metals Corp. (WPM). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
BHP has a Zacks Rank of #1 (Strong Buy), while Wheaton Precious Metals Corp. has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that BHP likely has seen a stronger improvement to its earnings outlook than WPM has recently. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
BHP currently has a forward P/E ratio of 10.55, while WPM has a forward P/E of 35.83. We also note that BHP has a PEG ratio of 3.52. 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. WPM currently has a PEG ratio of 7.17.
Another notable valuation metric for BHP is its P/B ratio of 1.90. 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, WPM has a P/B of 2.89.
These metrics, and several others, help BHP earn a Value grade of B, while WPM has been given a Value grade of F.
BHP sticks out from WPM in both our Zacks Rank and Style Scores models, so value investors will likely feel that BHP is the better option right now.
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