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AU vs. AEM: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in Mining - Gold stocks are likely familiar with AngloGold (AU) and Agnico Eagle Mines (AEM). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

AngloGold and Agnico Eagle Mines are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture for value investors.

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 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.

AU currently has a forward P/E ratio of 15.30, while AEM has a forward P/E of 69.64. We also note that AU has a PEG ratio of 0.46. 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 69.64.

Another notable valuation metric for AU is its P/B ratio of 2.63. 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 2.67.

These are just a few of the metrics contributing to AU's Value grade of A and AEM's Value grade of D.

Both AU and AEM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AU is the superior value option right now.


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AngloGold Ashanti Limited (AU) : Free Stock Analysis Report
 
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
 
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