Investors looking for stocks in the Mining – Gold sector might want to consider either Gold Fields (GFI) or Agnico Eagle Mines (AEM). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Gold Fields and Agnico Eagle Mines are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that GFI likely has seen a stronger improvement to its earnings outlook than AEM has recently. But this is just one factor that value investors are interested in.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company’s fair value.
GFI currently has a forward P/E ratio of 7.57, while AEM has a forward P/E of 18.66. We also note that GFI has a PEG ratio of 0.23. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. AEM currently has a PEG ratio of 18.66.
Another notable valuation metric for GFI is its P/B ratio of 2.84. 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 3.12.
These are just a few of the metrics contributing to GFI’s Value grade of A and AEM’s Value grade of C.
GFI stands above AEM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GFI is the superior value option right now.
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