Investors looking for stocks in the Mining – Gold sector might want to consider either Harmony Gold (HMY) or Osisko Gold Royalties (OR). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Harmony Gold has a Zacks Rank of #2 (Buy), while Osisko Gold Royalties has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that HMY likely has seen a stronger improvement to its earnings outlook than OR has recently. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
HMY currently has a forward P/E ratio of 6.38, while OR has a forward P/E of 23.77. We also note that HMY has a PEG ratio of 0.45. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. OR currently has a PEG ratio of 0.75.
Another notable valuation metric for HMY is its P/B ratio of 1.49. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. For comparison, OR has a P/B of 1.54.
These are just a few of the metrics contributing to HMY’s Value grade of A and OR’s Value grade of D.
HMY stands above OR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HMY is the superior value option right now.
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