Investors with an interest in Mining - Gold stocks have likely encountered both AngloGold (AU) and Franco-Nevada (FNV). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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, AngloGold is sporting a Zacks Rank of #1 (Strong Buy), while Franco-Nevada has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that AU likely has seen a stronger improvement to its earnings outlook than FNV has recently. But this is just one factor that value investors are interested in.
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 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.
AU currently has a forward P/E ratio of 14.11, while FNV has a forward P/E of 58.44. We also note that AU has a PEG ratio of 0.40. 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. FNV currently has a PEG ratio of 14.61.
Another notable valuation metric for AU is its P/B ratio of 2.84. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, FNV has a P/B of 3.61.
These metrics, and several others, help AU earn a Value grade of B, while FNV has been given a Value grade of F.
AU is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that AU is likely the superior value option right now.
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AngloGold Ashanti Limited (AU) : Free Stock Analysis Report
Franco-Nevada Corporation (FNV) : Free Stock Analysis Report
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