Investors interested in stocks from the Mining – Gold sector have probably already heard of Gold Fields (GFI) and Agnico Eagle Mines (AEM). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
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 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, both Gold Fields and Agnico Eagle Mines are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture 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.
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.
GFI currently has a forward P/E ratio of 14.78, while AEM has a forward P/E of 39.66. We also note that GFI has a PEG ratio of 0.46. 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. AEM currently has a PEG ratio of 39.66.
Another notable valuation metric for GFI is its P/B ratio of 2.32. 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, AEM has a P/B of 2.82.
Based on these metrics and many more, GFI holds a Value grade of A, while AEM has a Value grade of D.
Both GFI and AEM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GFI is the superior value option right now.
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